Banks Write Off GH¢1.64bn, NPL Stock Rises to GH¢21.0bn in 2025 – BoG
By Praisebell Rosemond Larbi
Banks in Ghana wrote off GH¢1.64 billion in bad loans in 2025, representing a sharp 57.1 percent decline compared to the previous year, according to the latest industry data released by the Bank of Ghana.
The figures, captured in the Domestic Money Banks Income Statement and the January 2026 Banking Sector Developments Report, show a significant reduction in impairment charges relative to 2024, when banks made provisions totalling GH¢3.82 billion for loan losses, depreciation and other credit-related adjustments.
Despite the lower write-offs, asset quality risks within the banking sector remain elevated. The industry’s Non-Performing Loans (NPL) ratio declined year-on-year to 18.9 percent in December 2025, from 21.8 percent in December 2024, reflecting gradual improvements in credit risk management.
When adjusted for fully provisioned loan loss categories, the NPL ratio improved more significantly, falling from 8.5 percent to 5.0 percent over the same period.
NPL Stock Edges Higher
However, in absolute terms, the stock of non-performing loans increased marginally. The total NPL stock rose by 0.8 percent to GH¢21.0 billion in December 2025, compared with a sharp 31.4 percent growth recorded in December 2024.
The central bank attributed the overall decline in the NPL ratio to improvements in asset quality across most sectors of the economy, although vulnerabilities persist in specific areas.
A breakdown of the data shows that the private sector continues to account for the overwhelming majority of bad loans, largely due to its dominant share of total credit exposure. The proportion of NPLs attributable to the private sector increased to 97.5 percent in December 2025, up from 96.2 percent a year earlier.
Conversely, the share of non-performing loans linked to the public sector declined to 2.5 percent from 3.8 percent over the same comparative period.
Sectoral Trends
While most sectors recorded improvements in asset quality, two key sectors saw a deterioration in credit performance.
The NPL ratio in the construction sector increased slightly from 29.8 percent to 30.7 percent, while the agriculture, forestry and fishing sector experienced a more pronounced rise from 38.0 percent to 46.3 percent.
The central bank noted that aside from these sectors, asset quality indicators generally improved during the review period, contributing to the overall reduction in the industry’s NPL ratio.
Balancing Profitability and Risk
The decline in provisions and write-offs suggests stronger recovery efforts and improved loan performance in parts of the banking system. However, the elevated NPL stock and sector-specific vulnerabilities indicate that credit risk remains a key concern for banks.
Analysts say sustained economic recovery, improved borrower repayment capacity, and prudent credit risk management will be critical in further reducing bad loan levels and strengthening financial system stability.
The latest data highlights a banking sector that is gradually stabilising but still navigating legacy credit risks in a challenging operating environment.
