Rédaction Africa Links 24 with Ghanaian Times
Published on 2024-03-08 14:38:29
In 2023, banks in Ghana experienced a substantial growth in profit, with a staggering 224.6 per cent increase to GH¢8.3 billion. This marked a significant rebound from the losses incurred in 2022 due to the Domestic Debt Exchange Programme. The banking industry had reported losses of GH¢6.6 billion in the previous year.
The January 2024 Monetary Policy Report from the Bank of Ghana highlighted the key factors that contributed to the improved profit performance in 2023. Net interest income saw a growth of 41.5 per cent compared to 18.7 per cent in 2022, while fees and commissions increased by 22.7 per cent in 2023, slightly lower than the growth of 25.2 per cent seen in 2022.
The Central Bank noted that the increased growth in net interest income in December 2023 was due to higher interest income on loans and investments as a result of increased lending rates and interest rates on money market instruments. Additionally, the moderation in interest expenses, attributed to a decrease in borrowings during the year, also contributed to the higher growth in net interest income compared to the previous year.
Profitability indicators for the banking sector showed positive trends in December 2023. The Return on Assets (ROA) improved to 5.4 per cent from -3.8 per cent in December 2022, and the Return on Equity (ROE) rose to 34.2 per cent from -25.5 per cent over the same period.
Banks also reported lower impairments on financial assets in 2023, leading to improved profit performance. Total provisions and impairments contracted by 79.2 per cent in December 2023, after a sharp increase in December 2022 due to impairments on restructured bonds.
Operating expenses saw a higher growth of 34.9 per cent in December 2023 compared to 27.2 per cent in December 2022, driven by increased other operating expenses and staff costs.
Overall, the Bank of Ghana stated that the banking sector showed signs of gradual recovery in 2023 following the challenges of the previous year. Growth in assets was supported by increased liquidity flows from deposits and a build-up in shareholders’ funds from the profits generated by banks.
The sector is expected to remain stable with the implementation of recapitalization plans throughout the year. The positive performance indicators reflect a resilient banking industry in Ghana, demonstrating significant growth and profitability in 2023.
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