Collateral registration: Value of secured loans by banks and SDIs falls to ¢5.26bn – BoG

The value of secured loans for which collateral was registered by banks and Specialized Deposit-Taking Institutions was estimated at ¢5.26 billion in the first quarter of 2023.

This is relative to ¢6.5 billion recorded during the same period in 2022, indicating a year-on-year decline of 19.23%.

According to the First Quarter Report of Collateral Registration published by the Bank of Ghana, banks accounted for ¢4.3 billion of total secured loans, representing a 25.1% decrease during the same period last year.

On the other hand, the Specialized Deposit-Taking Institutions recorded a total amount of ¢924.7 million of secured loans. This represented a share of 17.6% and an increase of 29.8% over the same period in 2022.

Banks registered the largest share of the total value of secured loans in quarter one (Q1) 2023, with 82.4%.

The share of secured loans by Savings and Loans companies increased to 9.3% as compared to the same quarter in 2022, while that of Finance Houses declined to 0.3% from 0.4% in quarter one of 2022.

The share of secured loans by Microfinance Institutions also moderated to 1.0% in the first quarter of 2023 from 0.9% in the same period last year,  whilst the cumulative share of loans from the remaining lending institutions increased to 6.86% from 3.6% during the same comparative period.

Average lending rates by banks’ lowest cross lending institutions

The average lending rates for secured loans by banks constituted the lowest across all the lending institutions, at 21.2% in Q1 2023, down from 24.2 percent in Q1 2022.

Leasing Companies recorded the second lowest average lending rate of 29.5% in Q1 2023, an increase from 13.2% in Q1 2022, whilst that of Rural and Community Banks increased to 34.3% in Q1 2023 from 32.5% recorded in the same period last year.

The average lending rate on secured loans granted by the Savings and Loans Companies declined to 45.3% in the review period from 46.4% recorded in Q1 2022.

Of the banks and SDIs, Finance Houses recorded the highest average lending rate of 59.6% in Q1 2023, an increase from 48.8% recorded in the same quarter in 2022.

The total number of collateral registrations in Q1 estimated at 46,258

Meanwhile, the total number of collateral registrations recorded in the first quarter of this year was 46,258, compared to 39,052 registrations in the same quarter of 2022.

The Savings and Loans Companies recorded a total of 24,125 discharges of collateral registered in respect of loans and this accounted for 89.6% of the total number of discharges. The number of registrations discharged by the Savings and Loans firms was the highest across the lending institutions.

This was followed by the Rural and Community Banks with 1,684 discharges, representing 6.3% of total discharges for the period.

Banks and Microfinance Companies recorded 521 and 391 discharges respectively, representing respective shares of 1.6% and 0.6% of total discharges.

The Collateral Registry was established by the Bank of Ghana on February 1, 2010, pursuant to
Borrowers and Lenders Act, 2008 (Act 773).

The Borrowers and Lenders Act, 2020 (Act 1052) was enacted to regulate transactions between
borrowers and lenders, to establish a Collateral Registry, to provide a legal framework for the
registration and enforcement of security interests in collateral, to establish an order of priority of
security interests, to provide for credit agreements and related matters.