Banks drop interest rates
By
Elorm Desewu
Universal
banks in the country have marginally dropped their interest rates on loans,
according to figures from the Bank of Ghana.
The
average lending rates of banks declined to 27.8 percent from 29.3 percent over
the same comparative periods.
The
weighted average interbank lending rate, that is, the rate at which commercial
banks lend to each other, also declined to 15.6 percent in February 2019 from
18.3 percent same period last year, in line with the monetary policy rate.
An assessment of the banking sector shows that
the recently recapitalized banking sector is profitable, liquid and solvent
exhibiting strong growth prospects in the outlook.
In
the first two months of 2019, the banking sector posted a stronger after-tax
income. Total assets stood at GH¢108.9 billion, representing an annual growth
of 14.5 percent in the year to end-February 2019. The growth in total assets
was funded mainly from increased deposits and equity injection from the
recapitalization exercise.
Key
financial soundness indicators of the industry have also improved, with the
Capital Adequacy Ratio (CAR) at 21.7 percent in February 2019, significantly
higher than the prudential requirement of 10.0 percent.
The
improved solvency enhances the banking sector’s capacity to deepen financial
intermediation and strengthens banks’ resilience to shocks going forward. Also,
profitability ratios improved while liquidity measures remain broadly adequate.
The
Non-Performing Loans (NPL) ratio has declined from 21.6 percent in February
2018 to 18.2 percent in February 2019, signalling some moderation in the
industry’s exposure to credit risk. The on-going write-off policy and
strengthening of bank’s risk management practices is expected to further impact
positively on the industry’s NPLs going forward.
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