NPLs Drop as Capital Ratios Hold Firm, Underscoring Banking Sector Stability
By Praisebell Rosemond Larbi
The latest sector data for October 2025 highlights a steady decline in Non-Performing Loans (NPLs), resilient capital ratios, and moderate growth in lending, signals that banks continue to manage risks prudently while supporting economic activity. Ghana’s banking sector is showing renewed signs of strength as key financial soundness indicators point to improving stability, even amid a more cautious lending environment and tightening liquidity conditions.
According to the report, the industry-wide NPL ratio fell to 19.5% in October 2025, down from 20.4% in September, marking one of the most consistent improvements in loan performance in recent months. The decline reflects a combination of improved loan recovery efforts and a gradual pickup in credit extension. When the industry excludes the “loss” category typically loans considered unrecoverable, the NPL ratio held firm at 6.8%, indicating that the bulk of bank assets remain healthy.
Capital adequacy also remains a strong anchor of stability. The capital adequacy ratio (CAR) stood at 17.9%, slightly below the mid-year peak of 20.3% but still comfortably above regulatory requirements. This suggests that banks retain enough buffers to absorb potential shocks, a critical factor as the sector adjusts to a more disciplined post-debt-restructuring environment.
Sector data further show that Ghanaian banks have expanded their asset base over the past year, although October recorded a modest slowdown. Total assets grew from GH¢367.2 billion in October 2024 to a peak of GH¢428.6 billion in September 2025, before easing to GH¢423.3 billion in October. Deposits followed a similar trajectory, rising from GH¢277.3 billion to GH¢309.8 billion, then moderating slightly to GH¢302.0 billion as liquidity conditions tightened.
Despite the slight decline in deposits and assets in the latest month, lending activity continued to firm. Total advances reached GH¢103.1 billion in October 2025, reflecting cautious but ongoing confidence in the private sector. Analysts note that the recent improvements in lending mirror both the recovery in macroeconomic conditions and efforts by banks to rebalance their portfolios toward productive sectors.
Industry observers say the combination of declining NPLs, stable capital buffers and measured credit growth underscores a sector that is gradually regaining momentum after years of pressure from debt restructuring, inflation spikes and exchange rate volatility. While tighter liquidity and elevated credit risks remain, the latest figures suggest a sector that is better positioned to withstand shocks and support Ghana’s wider economic rebound.
With loan quality improving and capital levels holding steady, analysts expect the banking industry to remain resilient in the months ahead, even as broader economic conditions continue to evolve.
