Banking sector improves with bad loans falling to 23.6%
By The New Finder reporter
Ghana’s banking industry has recorded an improvement in loan quality, with the sector’s Non‑Performing Loans (NPL) ratio declining to 23.6 percent in April 2025, down from 25.7 percent in April 2024, according to the Bank of Ghana’s May 2025 Banking Sector Development Report.
When adjusted for the fully provisioned loan-loss category, the NPL ratio improved further to 9.0 percent, compared to 11.1 percent in the same period last year.
The central bank attributes the decline to stronger growth in total credit compared to the growth in NPL stock, a sign of recovering credit health within the financial sector. The report notes that the NPL stock rose by 8.7 percent year-on-year, reaching GHS21.7 billion in April 2025, up from GHS20.0 billion in April 2024.
The private sector remained the biggest contributor to the industry’s NPL stock, accounting for 93.4 percent of non‑performing loans as of April 2025, up from 91.0 percent in April 2024. The public sector’s share of bad loans declined to 6.6 percent, from 9.0 percent a year earlier.
This trend mirrors the broader credit distribution in the banking system, where private sector lending dominates total credit exposure.
The agriculture, forestry, and fishing sector continued to register the highest NPL ratio at 62.1 percent, up from 58.7 percent the previous year.
The transportation, storage, and communications sector followed, with an NPL ratio of 53.9 percent, up from 49.0 percent in April 2024.
The construction sector saw significant improvement, with its NPL ratio dropping sharply from 41.3 percent to 30.3 percent, the most notable reduction among all sectors.
The mining and quarrying sector recorded the lowest NPL ratio at 9.8 percent, improving from 14.4 percent last year.
The consistent decline in NPL ratios signals improving credit risk management and stronger underwriting practices by banks. However, analysts caution that elevated ratios in sectors such as agriculture and transport reflect underlying structural issues that must be addressed to ensure long-term credit stability. The report’s findings coincide with the Bank of Ghana’s broader efforts to strengthen financial sector resilience and support post-DDEP (Domestic Debt Exchange Programme) recovery through improved capital adequacy and liquidity provisioning for banks.
