Banks Write Off GH¢349.36m As Bad Debt

The Income Statement of Domestic Money Banks (DMBs) has revealed that an amount of GH¢349.36 million was written off by banks as bad debt in February 2022.

The amount, which comprised loan losses and depreciation, is, however, lower than the GH¢364.46 million recorded in February 2021.

It said the Non-Performing Loans (NPLs) ratio, declined despite the nominal increase in the stock of NPLs to GH¢8.1 billion in February 2022, from GH¢7.3 billion in February 2021.

“The decline in the NPL ratio was on the back of a slowdown in the growth of the NPLs stock to 11.2%, from 15.1%, while the stock of loans, which forms the base of the NPL ratio, recorded a higher growth of 18.3%, from 3.6% during the same review period,” BoG said.

It further noted that the industry’s adjusted NPL ratio also declined sharply from 6.6% to 4.9%, one of the lowest the industry has recorded.

It indicated also that the lower NPL ratio came on the back of a decline in the private sector NPL ratio to 15.3% in February 2022 from, 16.5% in February 2021, while the public sector NPL ratio doubled to 6.4%, from 3.2% during the same reference period.

The sectors that recorded declines in their NPL ratios during the period under review included Services (from 9.2% to 7.5%), Electricity, Water and Gas (from 25.6% to 13.7%), Manufacturing (from 19.0% to 11.1%), and Mining and Quarrying (from 11.3% to 8.7%).

On the other hand, the sector that recorded the highest increase in its NPL ratio was Construction (from 24.4% to 31.5%), followed by Agriculture, Forestry and Fishing (21.0% to 27.8%), then Transportation, Storage and Communication (from 7.3% to 12.4%) and then Commerce and Finance (from 18.9% to 21.4%).

The sector with the lowest NPL ratio is the Services sector, though it is the highest recipient of the industry’s loans, while the Construction sector, the third largest recipient of industry loans, has the highest NPL ratio.