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GHC 3bn bank loan receivables eroded by COVID-19

Banks in Ghana lost out on GH₵3 billion loan repayment from customers due to the COVID-19 outbreak, the Ghana Association of Bankers (GAB), has revealed.

The Deputy Chief Executive Officer of the professional group, John Awuah, said this covered March to June 2020 “as a result of the restructuring and re-profiling of loans to customers, for instance”.

Mr Awuah made the revelations in his comments on the PwC Ghana’s 2020 Banking Survey captured in the report released by the audit firm.

Comparatively, the figure exceeds the combined support by the government to ease the burden on companies in the country.

The government has earmarked about GH₵2 billion guarantee fund for over 100 large-scale firms to access more capital for operations. This was after an initial GHC 600m for small and medium-scale firms being supervised by the National Board for Small-Scale Industries (NBSSI).

The survey was themed: ‘The new normal: Banks’ response to COVID-19’.

It sought to explore how banks in Ghana intend to operate after COVID-19.

Providing more details on some of the adverse impact of the pandemic in the sector, Mr Awuah pointed out that within the same period at the consideration, a total of GHC 3.6 billion new loans were approved and disbursed to customers with “GHC 1.1 billion drawdowns allowed on existing legacy committed lines and GHC 2 billion of new lines committed and made available during this uncertain period”.

Mr Awuah cited positive gains after the banking sector clean-up only to be wiped out by the pandemic.

He noted that banks with high exposures to significantly affected sectors such as aviation, tourism, transport, education and religion have experienced the direct impact of the pandemic in the form of depressed cash flows.

This was due to lower repayment inflows on existing exposures and pressure to restructure and in some cases, calls for further drawdowns to cushion customers during the pandemic.

“The strongly capitalised banks that survived the reforms continue to increase investments in Information Technology (IT) to maximise efficiencies while meeting the ever-changing demands of sophisticated customers,” he added.

He lauded the Coronavirus Alleviation Programme (CAP) announced and being
implemented by the government of Ghana and other interventions introduced by Bank of Ghana coupled with the response from the banks, all of which are aimed at cushioning businesses, including banks and their customers, against the economic and social impact of the pandemic.

He said the banks have not folded their arms but contributed in various ways
to support customers and the general public by not only implementing the guidelines and interventions announced by the regulator but also setting up a COVID-19 relief fund of GHS 10 million established by the Ghana Association of Bankers (GAB) with equal contributions from the banks.

GAB called on the government to introduce policy initiatives and incentives to banks to redirect the trajectory of credit expansion in the post-COVID-19 era and urge businesses and households to take full advantage of any ancillary opportunities created by the pandemic.

 

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