Some GHS 83.9bn (43.1%) of the banking industry total assets value have been put in securities (mainly government securities) by the various banks in the country.
In its May 2022 Monetary Policy Report, the Bank of Ghana notes that, investment (comprising bills, securities and equity) grew by 14.5 percent to GHS 83.9 billion as at end-April 2022 compared to a growth of 34.9 percent in April 2021.
Investments, the Central Bank noted, continued to dominate the asset mix, but its share declined from 47.0 percent in April 2021 to 43.2 percent in April 2022.
According to the Bank of Ghana, banks’ investment portfolio as at end-April 2022 remained in favour of long-term debt instruments (securities), a response to higher interest rates on the long-term instruments compared to rates on money market instruments.
The share of securities increased to 78.4 percent in April 2022 from 71.6 percent in April 2021. The share of short-term bills in total investments, however, declined to 21.3 percent from 28.1 percent during the same comparative period.
The share of bills may, however, increase as banks move to the shorter end of the market to take advantage of the increasing yields in that segment of the market following the recent hikes in the Monetary Policy Rate (MPR). The share of equity investments remained insignificant at 0.3 percent.
Per the May 2022 Monetary Policy Report, the banking industry’s total assets is valued at GHS 194.3bn.
Total assets of the banking industry recorded a stronger year-on-year growth of 24.8 percent to GHS 194.3 billion as at April 2022, compared to a growth of 16.4 percent in April 2021.
The higher growth in assets reflected in both domestic assets and foreign assets. Domestic assets increased by 25.2 percent in April 2022 from 17.2 percent in April 2021 while foreign assets grew by 18.5 percent, compared to a growth of 5.6 percent during the same comparative period.
The share of foreign assets in total assets declined to 6.2 percent from 6.5 percent, while that of domestic assets increased from 93.5 percent to 93.8 percent on account of a higher growth in domestic assets during the reference period.
According to the Bank of Ghana (BoG), gross loans and advances increased by 25.8 percent (year-on-year) to GHS 60.2 billion at end-April 2022 compared to a growth of 7.0 percent in April 2021.
The stronger growth in gross loans and advances reflected in both private and public sector credit. Private sector credit recorded a rebound in growth of 26.5 percent to GHS 54.2 billion in April 2022 compared with a growth of 6.9 percent during the corresponding period in the previous year.
Public sector credit also recorded a higher growth of 19.6 percent to GHS 6.0 billion compared to a growth of 7.4 percent in the previous year. In terms of market share, the private sector continued to hold the bigger share of total credit of 90.0 percent in April 2022, a marginal increase from 89.5 percent in April 2021.
Accordingly, the share of public sector credit declined marginally from 10.5 percent to 10.0 percent between the two periods.
The share of “Cash and Due from banks” increased from 18.6 percent to 21.7 percent during the same comparative period whereas the share of banks’ non-earning assets (fixed assets and other assets) in total assets, however, moderated from 7.9 percent to 7.7 percent during the review period.
The Central Bank asserts the banking sector remains sound as evidenced by the strong financial soundness indicators (FSIs) of the sector as at April 2022, adding that key FSIs such as liquidity, solvency, efficiency, and profitability remained broadly healthy during the review period.
The Central Bank asserts the banking sector remains sound as evidenced by the strong financial soundness indicators (FSIs) of the sector as at April 2022, adding that key FSIs such as liquidity, solvency, efficiency, and profitability remained broadly healthy during the review period.
Source: norvanreports