The Bank of Ghana has disclosed that the banking sector has recorded a mixed performances in terms of commission, gross income, operating expenses and financial assets.
The BOG said net fees and commissions recorded a slower growth of 16.8 percent in June 2024, from 30.6 percent the previous year while other income recorded a sharp contraction of 16.2 percent to GH¢2.4 billion in June 2024, from GH¢2.8 billion in June 2023.
These developments in the different income lines according to the central bank in its Monetary Policy report for the month of July, culminated into a sharp increase in industry’s operating income to GH¢16.8 billion in June 2024, from GH¢14.9 billion in June 2023.
It said similarly, gross income increased to GH¢23.0 billion in June 2024, from GH¢20.1 billion in June 2023. The BOG said the cost lines recorded similar increases in June 2024, but at lower growth rates compared to the same period in 2023.
The central bank said the industry’s operating expenses grew by 15.5 percent in June 2024, compared to 44.9 percent in June 2023, on the back of slower growth in staff costs and other operating (administrative) expenses.
It also said impairment losses on financial assets, as well as provisions for bad debt and depreciation, contracted by 39.5 percent in June 2024, compared to 32.7per cent increase in June 2023.
The Central bank noted that the banking sector’s performance in June 2024 pointed to continuing recovery from the macroeconomic challenges since 2022.
However, it said asset quality concerns remained a drag on the performance of the sector noting that the banking sector remained profitable, liquid, and generally efficient during the review period.
The central bank said stability in solvency reflected the rebound in profitability in the industry post-Domestic Debt Exchange Programme (DDEP) implementation, as well as the ongoing recapitalisation effort by banks.
The bank said that outlook remained stable, but recapitalisation and enforcement of stringent credit underwriting standards, and intensified loan recovery efforts were critical to ensuring good performance of the banking sector in the medium term.
The Bank of Ghana (BOG) also disclosed that the banking industry remained profitable for the first half of 2024. The banks recorded higher profit-before-tax (PBT) and profit-after-tax (PAT) in June 2024 relative to the same period last year.
However, the growth rate in profit moderated to 25.5 percent in June 2024 relative to 51.4 per cent in the recent same period last year, BOG said.
The Bank said generally all income lines of the banking sector increased but at a lower growth rate in June 2024 relative to the same period last year.
The Bank said net interest income grew by 19.4 per cent to GH¢11.8 billion, lower than the corresponding period’s growth of 41.4 per cent in 2023.
In year-on-year terms, the Bank said interest income increased to GH¢18.0 billion from GH¢15.1 billion, representing a growth of 19.1 percent relative to 44.3 per cent in June 2023.
The Bank attributed the lower growth in interest income to relatively lower rates on money market instruments this year compared to the first half of 2023, as well as a decline in lending rates. It said interest expenses also rose to GH¢6.2 billion in June 2024, representing a lower growth rate of 18.6 percent compared to the 50.0 percent recorded in June 2023.
By Jibril Abdul Mumuni
GNA
