BoG flags credit risks despite drop in bad loans
The Bank of Ghana (BoG) has expressed concern over persistent credit risk in the country’s banking sector, warning that vulnerabilities remain significant even as key indicators show gradual improvement.
According to a statement issued after the Monetary Policy Committee’s (MPC) latest review of the economy, the central bank noted that the industry’s non-performing loan (NPL) ratio declined to 20.8 per cent in August 2025, down from 24.8 per cent a year earlier.
The improvement was largely attributed to growth in bank credit and a contraction in the stock of NPLs.
While acknowledging this progress, the BoG stressed that elevated credit risk remains a major concern and called for strict adherence to recapitalisation plans and the full implementation of regulatory guidelines aimed at lowering NPLs.
“Continued commitment to these measures is essential to enhance the resilience of the banking sector and safeguard financial stability,” the Bank said.
Despite the lingering credit-risk challenges, the banking sector delivered robust results over the first eight months of 2025.
The BoG highlighted continued asset growth, improved profitability and stronger efficiency indicators, reflecting the industry’s efforts to recover from recent economic pressures.
The Capital Adequacy Ratio (CAR), a key gauge of a bank’s ability to absorb potential losses, rose sharply to 17.7 per cent in August 2025, compared with 10.2 per cent in August 2024, even without the temporary regulatory relief measures introduced during the financial-sector clean-up.
The central bank underscored that maintaining this positive trajectory will depend on prudential lending practices, effective risk management and strict supervision to ensure that credit expansion does not compromise asset quality.
