Banking sector profit up 25.5%
The Bank of Ghana’s Monetary Policy report has revealed that the banking sector’s profit-after-tax increased by 25.5% to GH¢5.4 billion in June 2024.
This represents a slowdown compared to the 51.4% growth recorded in June 2023. Profit-before-tax also rose by 22.8%, reaching GH¢8.1 billion.
The slower profit growth in the first half of 2024 is attributed to smaller increases in interest income and other revenue streams compared to the same period in 2023.
Interest Income
Net interest income grew by 19.4% to GH¢11.8 billion, lower than the 41.4% growth recorded in 2023. Year-on-year, interest income rose to GH¢18.0 billion from GH¢15.1 billion, marking a 19.1% increase, compared to a 44.3% rise in June 2023. This slower growth is due to lower interest rates on money market instruments and a decline in lending rates. Meanwhile, interest expenses grew by 18.6% to GH¢6.2 billion in June 2024, down from 50.0% in June 2023.
Fees and Commissions
Net fees and commissions grew by 16.8% in June 2024, compared to 30.6% a year earlier. Other income declined sharply by 16.2%, down to GH¢2.4 billion from GH¢2.8 billion in June 2023.
These changes in income streams contributed to an increase in operating income, which rose to GH¢16.8 billion in June 2024, from GH¢14.9 billion in the previous year. Gross income also increased, reaching GH¢23.0 billion from GH¢20.1 billion in June 2023.
Operating Costs
Operating expenses in the banking industry rose by 15.5% in June 2024, significantly lower than the 44.9% increase in June 2023. This reduction was driven by slower growth in staff costs and administrative expenses. Additionally, impairment losses on financial assets, provisions for bad debt, and depreciation declined by 39.5% in June 2024, compared to a 32.7% increase in June 2023.
