Banks Face High-Stakes Push to Cut NPLs to 10% by 2026 – Deloitte
By Praisebell Rosemond Larbi
Deloitte Ghana has cautioned that the Bank of Ghana’s ambitious target to reduce the banking sector’s non-performing loans (NPLs) to 10 percent by the end of 2026 will require aggressive and sustained recovery actions, despite notable improvements in asset quality over the past year.
In its analysis of the 2026 Budget and the broader financial sector outlook, Deloitte said the planned reduction marks one of the most consequential tests for Ghana’s banking stability following years of economic turbulence and balance sheet pressures.
The warning comes as the sector continues to record gradual progress. The industry’s NPL ratio has declined from 22.8 percent in 2024 to 20.4 percent as of September 2025. Deloitte attributes this improvement to a stronger cedi, increased loan write-offs, improved recovery efforts, and a slowdown in credit expansion as banks tightened underwriting standards.
However, the firm notes that achieving a further 10-percentage-point drop within just two years will demand more robust strategies. Under the Bank of Ghana’s newly issued NPL reduction guidelines, all regulated financial institutions are required to submit board-approved plans outlining how they will clean up their loan books, strengthen risk controls, and enhance recovery frameworks between now and 2026.
“These new requirements mean banks must demonstrate clear and measurable actions to reduce impaired assets. The central bank expects consistent progress, not short-term fixes,” Deloitte emphasised in its review.
Alongside the regulatory pressure, the report highlights a significant easing in credit conditions. Average lending rates have fallen sharply from 30.6 percent in 2024 to 22.7 percent in 2025, as macroeconomic indicators show signs of stability. Deloitte expects lending costs to continue trending downward should inflation and exchange rate conditions remain favourable. Lower borrowing costs, the firm argues, could stimulate new, higher-quality credit that may help offset legacy NPLs over the medium term.
A major case study of restructuring progress, according to Deloitte, is the National Investment Bank (NIB), which appears to be turning the corner following substantial government intervention. The state injected GH¢450 million in cash, GH¢1.5 billion in marketable bonds, and transferred GH¢500 million worth of Nestlé Ghana shares to support the bank’s recapitalisation.
These measures have helped NIB recover from a deeply negative capital adequacy ratio to a healthy 23 percent, restoring its compliance with prudential standards. With its balance sheet stabilised, the bank is now expected to focus on revitalising its core mandate, particularly lending to small and medium-sized enterprises, while expanding its transactions and payments capacity.
Deloitte believes the government’s intention to recapitalise other state-owned banks could further fortify the sector. Strengthening the capital base of these institutions, the firm notes, would stabilise depositor confidence, protect jobs, and prepare the banks for future listing on the Ghana Stock Exchange as part of long-term reform efforts.
Despite the encouraging developments, Deloitte reiterates that the road to a 10 percent NPL ratio remains steep. Banks must intensify customer engagement, pursue recoveries more aggressively, restructure viable but distressed facilities, and offload non-core or irredeemable assets. They must also strengthen early-warning systems to prevent further deterioration of loan quality.
With the financial sector entering a crucial period of rebuilding, Deloitte’s assessment underscores the delicate balance ahead. The success or failure of the NPL reduction plan will have significant implications for credit expansion, business confidence, and the broader economy in the years leading up to 2026.
