Lending rates drop
This means that the downward adjustment of the monetary policy
rate impacted positively, on the average lending.
Banks have also signalled a net easing of credit stance on
enterprises’ loans in the months ahead as new advances steadily rise.
According to the governor of the Bank of Ghana, (BoG), Dr
Ernest Addison, the policy and regulatory relief measures introduced have
enhanced liquidity in the banking system, preserved capital buffers, and
provided relief to customers severely impacted by the pandemic. These measures
have also helped banks and specialised deposit-taking institutions provide
support to critical sectors of the economy to mitigate the adverse impact of
the pandemic.
He said the banking sector remains liquid and well-positioned
to support growth, benefitting significantly from the recent reforms. To a
large extent, the policy interventions have also helped improve the soundness of
the banking sector and reduced the potential adverse spillback effects that the
banking sector may have had on the macro-financial landscape. The sector
remains robust as reflected by the strong Financial Soundness Indicators – Capital
adequacy levels are above the regulatory limits, the NPL ratio has declined,
and profitability remains strong.
As part of financial sector surveillance, the Bank assessed the
resilience of the banking system to credit and liquidity shocks emanating from
the pandemic. The findings revealed that, overall, the banking sector is robust
and largely resilient to the pandemic-related shocks. In addition, tail risks
arising from the changing macroeconomics landscape has had a moderate effect
and the banking sector soundness index has improved from the prepandemic
levels. Broadly, the prompt policy response to the COVID19 pandemic, including
the freeze on dividend pay-out, reduction in the Cash Reserve Requirement, and
the reduction in policy rate supported the sector to build reserves to
withstand credit shocks, he said.
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