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Banking sector experienced improved performance in first half of 2023 – BoG Governor

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Governor of the Bank of Ghana (BoG), Dr Ernest Adison, has said that the banking sector data for the first half of 2023 reflected some improved performance, despite declines in some key financial soundness indicators.

This, he said, comes after consensus reached among industry stakeholders on the treatment of the losses, and the timely introduction of the temporary prudential and regulatory reliefs by the Bank of Ghana.

Dr Addison stated that the prudential data showed portfolio rebalancing from medium- and long-term investments to short-term investments by banks, amid gradual increases in new loans.

As of June 2023, he said, the banking industry’s total assets was GH¢242.4 billion, indicating a 21.2 percent annual growth compared to 22.8 percent growth in June 2022.

The strong asset growth reflected mainly in investments, particularly short-term investments, while medium to long-term investments declined. Notwithstanding the increases in income levels, costs within the banking sector also increased, reflecting spillbacks from the operating environment. However, the increase in costs did not outweigh earnings, resulting in the strong profit-before-tax in the first half of the year, he explained.

He added, the developments culminated in a 51.2 percent increase in profit-before-tax in June 2023, compared with 20.8 percent growth recorded during the same period a year ago.

Similarly, the industry’s net income or profit-after-tax increased to GH¢4.3 billion from GH¢2.8 billion, representing a 51.4 percent increase in June 2023.

“Overall, the banking sector’s performance improved in the first half of 2023. For the rest of the year, the banking sector is expected to remain broadly stable, supported by regulatory reliefs and sustained growth in profitability. Also, banks have been advised to submit capital restoration plans to recapitalize progressively over a three-year period.

“The turnaround in banks’ profits, together with the planned equity capital injections, is expected to help rebuild banks’ capital buffers, enhance resilience, and reposition the sector to support the country’s growth agenda,” he said during the launch of the 60th anniversary of the Chartered Institute of Bankers Ghana in Accra on Tuesday, September 12.