Thursday, 18 April

Banks' profitability, solvency improve – BoG


Banks are returning to profitability, the Bank of Ghana has said at its monetary policy committee held on Monday, 22 May 2023.

Central bank governor Ernest Addison told journalists "performance of the banking sector broadly reflected the general macroeconomic operating environment as well as the impact of the DDEP as indicated in the 2022 audited financial statements".

However, he noted, "prudential returns for the first four months of 2023 have shown signs of recovery in the profitability of banks and a gradual improvement in the solvency positions, supported by the regulatory reliefs issued to safeguard stability of the financial sector".

A few months ago, the central bank said its “preliminary assessment of the impact” of the domestic debt exchange programme on the banking sector, based on December 2022 data, “indicates significant losses on account of impairment of banks’ holdings in GoG bonds”.

“The impact of the DDEP, as currently assessed, is moderated by the timely introduction of regulatory reliefs by the Bank of Ghana to support the banking sector, similar to the reliefs provided to banks at the onset of the Covid-19 pandemic”, Governor Addison said at the Monetary Policy Committee meeting in March 2023.

He said: “As a result, the industry is still fairly resilient”.

“Our preliminary assessment will be updated once banks’ external auditors complete their audits of banks’ 2022 financial performance making the necessary adjustments to fully reflect the DDEP impact”, he noted.

He said: “Banks are expected to publish their 2022 audited financial statements by the end of April 2023 following a one-month dispensation granted by the Bank of Ghana on the account of the DDEP”.

According to the governor, developments in the banking sector “broadly reflected the challenging operating environment in 2022 on account of macroeconomic conditions, and the recent implementation of the Domestic Debt Exchange Programme (DDEP) which all 23 universal banks participated in”.