The Governor of the Bank of Ghana Dr. Ernest Addison has reiterated that the financial sector reforms, spanning a three year period was the key antidote to the impact of covid-19 on banks.
During the surge of the coronavirus pandemic, the Bank of Ghana among others introduced policy measures to help contain the effect of covid-19 on the economy.
They included the lowering of the policy rate by 150 basis points [1.5%] and reduction of the macro-prudential Capital Conservation Buffer and Cash Reserve Requirement for banks, as well as the lowering of the primary reserve ratio of savings and loans companies, finance house companies, and rural and community banks.
“To a large extent, these regulatory reliefs proved timely for the banking sector as it navigated the unchartered paths during the pandemic”, Dr. Addison told the Ghana Association of Bankers.
In 2020, new advances [loans] grew by 15.8% year-on-year to GH¢34.4 billion in 2020. Banks also provided support and reliefs in the form of loan restructuring and loan repayment moratoria to cushion some 16,694 customers severely impacted by the pandemic.
At the end of December 2020, total outstanding loans restructured by banks amounted to GH¢4.5 billion, representing about 9.4% of industry loan portfolio.
These the Governor said add to the strong outturn of the Financial Soundness Indicators, alongside strong growth in assets, deposits, and investments.
Despite the positive results, Dr. Addison said the pandemic has also introduced several risks in the banking sector.
“Let me highlight three major risks that the pandemic either unearthed or intensified, which must be efficiently managed by banks to avoid any unintended consequences on the industry. These are cyber security risks, credit risks, and operational risks.”
Going forward, the Governor assured that the Bank of Ghana will continuously monitor the financial and economic environment to ensure the banking system operates effectively in delivering financial intermediation to support the recovery efforts from the pandemic [covid-19].
To this end, he said the policy measures including the reduction of regulatory capital buffers have been reduced to allow banks to continue to provide financing to households and businesses.
Source: Mypublisher24.com