ERNEST Addison, Governor of the Bank of Ghana, has indicated an assessment of the banking sector’s performance for the first half of 2022 showed robust growth in assets and deposits.
Dr. Addison, who was speaking to journalists Monday after a meeting of the Monetary Policy Committee (MPC), said total assets grew by 22.8 percent on a year-on-year basis to GH¢200.0 billion at end June 2022, compared to the growth of 17.2 percent in the previous year.
He said “Total deposits grew at a slower pace by 19.1 percent to GH¢131.3 billion, relative to 22.5 percent growth a year earlier. Key Financial Soundness Indicators of the banking industry remained positive. The Capital Adequacy Ratio was 19.4 percent in June 2022, well above the regulatory minimum of 13.0 percent. Core liquid assets to short-term liabilities improved to 30.2 percent, compared with 27.5 percent in the previous year. The non-performing loans ratio also improved to 14.1 percent at end-June 2022 compared with 17.0 percent in June 2021, reflecting some moderation in the growth of the stock of non-performing loans, as well as the rebound in credit growth.”
He continued that the banking sector’s profit before tax was GH¢4.4 billion, representing 21.6 percent annual growth in June 2022, compared to 32.1 percent in the previous year. Also, net interest income grew at 12.4 percent, compared with 19.4 percent a year ago. Net fees and commissions, however, grew by 29.2 percent, compared to 19.6 percent in the previous year, reflecting a rebound in trade finance related business. “These developments culminated in a 23.0 percent growth in operating income, compared with a growth of 15.7 percent in the corresponding year. Operating expenses also recorded a higher growth of 22.9 percent, compared to 7.3 percent in the previous year, moderating the growth in profit before tax during the first half of 2022,” he added.
The two inflation readings since the May MPC meeting pointed to continued broad-based upward pressure on prices, reflecting the pass-through effects of increases in ex-pump petroleum prices, transport costs, currency depreciation, and food prices.
Headline inflation increased markedly from 23.6 percent in April 2022 to 27.6 percent in May, and then further up to 29.8 percent in June.
Food inflation went up from 26.6 percent in April to 30.1 percent in May, and then to 30.7 percent in June 2022. On the other hand, non-food inflation moved from 21.3 percent to 25.7 percent, and then to 29.1 percent in June 2022.
“Similar to the observed trends in headline inflation, underlying inflation pressures have also risen sharply. The bank’s core inflation measure, defined to exclude energy and utility, rose from 22.3 percent in April 2022 to 26.4 percent in May, and then to 28.4 percent in June. In addition, weighted inflation expectations from businesses, banks, and consumers remained elevated in June 2022,” Dr. Addison.