The Ghana Association of Savings and Loans Companies says it is working to improve asset quality across the sector and bring its Non-Performing Loans ratio within the threshold set by the Bank of Ghana.
The move comes as savings and loans companies continue to contend with liquidity pressures, rising funding costs and delays in receiving repayments on loans granted to public-sector employees.
Chief Executive Officer of the Association, Tweneboah Kodua Boakye, says the sector’s challenges are putting pressure on institutions to become more efficient and disciplined.
“The challenges confronting our institutions are real and should not be understated.”
He says that while asset quality remains a concern, there has been a marginal improvement in the sector’s NPL ratio, which has fallen from 15 percent to 14 percent.
But delayed government payments remain a concern, particularly for loans granted to public-sector workers.
Boakye says institutions sometimes have to wait several months before receiving funds due to them.
“Delay in receiving remittances from the Controller and Accountant General (on loans granted to public sector employees – sometimes delaying about 3 to 4 months”
He says the delays add to the pressure on institutions already dealing with several other operational challenges.
The Association’s CEO also points to the growing cost of regulatory compliance and technology investments, alongside changing customer behaviour.
“sector continues to contend with pressure on liquidity and funding costs, asset quality concerns (even though we have seen some marginal decline in NPLs from 15% to 14%), regulatory compliance costs, technology investment requirements, changing customer behaviour”
Competition for customers is also becoming more intense, with Boakye accusing some bigger institutions of using questionable tactics to win clients.
“poaching of our clients by bigger institutions using unorthodox and unethical means including using some Credit Bureaus”
Despite these pressures, the Association says members must strengthen their operations as the regulatory environment evolves.
“These challenges require institutions to become more efficient and more disciplined. Nevertheless, the regulatory environment is also changing significantly.”
The Association says improving asset quality and reducing NPLs will remain a key priority as it works with the Bank of Ghana to build a stronger savings and loans sector.
