COVID-19: We’ll lend cautiously – Banks

Banks have stepped up due diligence procedures on their customers to whom they lend after admitting that a few missteps in the past contributed significantly to credit losses and the subsequent fall of a quarter of their counterparts, the umbrella body of banks in the country has said.

The Ghana Association of Bankers (GAB), which is an advocate for the 23 banks, said the increased vigilance was necessary to ensure that funds from the sector did not end up in the hands of those who could not repay, especially at a time when businesses needed funds to stay afloat.

In an interview that discussed the fortunes of banks under the raging novel Coronavirus disease (COVID-19) pandemic, digitisation amid the pandemic and banks’ relationships with customers, among others, the Deputy Chief Executive Officer (CEO) of the association, Mr John Awuah, told the Graphic Business that the new vigilance would help contain the impact of the pandemic on banks’ loan books.

He added that the initiative had already ensured that banks continued to give loans to their customers in spite of the uncertainty that the viral spread had created.

The Banking Digest

The interview was conducted to launch of a new programme aimed at shining more light on the banking sector through interviews with key stakeholders in the sector.

Dubbed The Banking Digest, the prerecorded discussion is to be broadcast on the YouTube channel and the Facebook page of the Daily Graphic at 9 a.m. every Monday.

It will also be available on www.graphic.com.gh and the Graphic NewsPlus, the digital version of Graphic newspapers, including the Graphic Business.

The programme is meant to bridge the gap between banks and related service providers and their stakeholders through discussions that seek to shape policies and inform how the sector reacts to changes and concerns.

Bold step

Mr Awuah said in spite of the economic grim that the pandemic had created, banks were still lending, with records at the association showing that the sector had disbursed more than GH¢3 billion in credit to businesses between March, when the virus first broke in the country, and May.

Coming at a time when the Bank of Ghana (BoG) and the government had concurred that the viral spread would cause economic growth to slump from an estimated 6.8 per cent to less than two per cent this year, the Deputy CEO said the continuous lending was a bold step by banks to help support economic growth.

“When crises happen and there is uncertainty around the environment, the number one thing that banks always do is to say ‘let’s close the taps,’ but because we know that this is the time that we need to oil the taps so that the banking population can go about their normal activities, banks have been active in spite of the challenges and the potential impairment that possibly, is awaiting us, ” he said.

New norm

Mr Awuah, who is the immediate past CEO of the Universal Merchant Bank Limited (UMB), said unlike before, banks were granting such loans under strict due diligence criteria.

“Because of our history, banks are now extremely cautious. Much as we want to ensure that there is liquidity out there to help with the national agenda, we are also careful to ensure that we do not go back to our old ways, where things got out of hand a bit and we recorded significant credit losses,” he explained.

He added: “Now, we are lending but we are lending with both eyes open and making sure that we are giving money to those who have the ability to turn it around and pay back,” he said.

As custodians of depositors’ funds, he said banks were enjoined to always engage in responsible lending that would not result in impairments and subsequent loss of the funds.

He, however, said thanks to the strict adherence to due diligence procedures, the association was convinced that while COVID-19-induced impairment pressures were bound to arise, the industry would be “able to weather the storm.”


A BoG report published in May showed that the stock of non-performing loans (NPLs) in the banking sector declined by 7.7 per cent to GH¢6.5 billion in March 2020, compared to the same period in 2019.

The report attributed the annual decline “to significant recoveries and write-offs.”

It, however, noted that although the NPL ratio as of March 2020 declined relative to the same period last year, it was still higher than the rate recorded in December 2019 but said “the uptick is largely due to the slowdown in credit growth rather than deterioration in asset quality.”


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