The banking sector posted strong performance in April despite the reversal of the COVID-19 regulatory relief measures introduced in March this year, Governor of Bank of Ghana (BoG), Dr Ernest Addison has said.

“Total assets rose to GH¢194.3 billion at end-April 2022, which represented 24.8 percent annual growth, relative to 16.4 percent growth in the previous year,” he said in Accra on Monday during a press conference to announce a new policy rate after the 106^th regular meeting of the Monetary Policy Committee (MPC) of the BoG.

The BoG hiked the policy rate by 200 basis points (two per cent) to 19 from 17 per cent.

Basically, the policy rate is the rate at which the BoG lends to commercial banks.

The BoG a couple of months ago reversed the relief measures it offered banks last year in the heat of the COVID-19 pandemic last year such as the reversal of the Cash Reserve Ratio of eight per cent to pre-pandemic level of 12 per cent, increasing the reserve requirement for lenders from back to 10 per cent from eight per cent.

Dr Addison, who chairs the MPCsaidthe strong performance recorded by the banking industry was underscored by increased deposits and borrowings.

“Total deposits grew by 21.3 percent to GH¢127.2 billion, while borrowings recorded a strong growth of 66.2 percent to GH¢25.9 billion at end-April 2022,” he said.

The Governor said the key Financial Soundness Indicators of the banking industry remained strong, with the Capital Adequacy Ratio at 21.3 percent, well above the regulatory minimum of 13.0 percent.

“Core liquid assets to short-term liabilities improved to 28.2 percent in April 2022, compared with 24.9 percent a year earlier. The Non-Performing Loan ratio eased to 14.3 percent at end-April 2022, compared with 15.5 percent in the previous year, signaling some improvement in asset quality during the year,” Dr Addison said.

The Governor disclosed that in the first four months of 2022, banks’ profit before tax stood at  GH¢2.9 billion, representing a 26.3 percent growth, compared with 39.6 percent growth for the same period of last year.

He indicated that Net Interest Income grew by 12.2 percent to GH¢4.6 billion, compared to 18.4 percent growth a year ago. Net fees and commissions grew by 17.7 percent to GH¢1.1 billion, compared with 26.5 percent growth last year, due to decline in trade finance-related activities in the economy.

“Other income increased to GH¢1.0 billion, representing 117.5 percent growth, relative to the contraction by 7.9 percent last year. These developments resulted in a 22.1 percent jump in operating income to GH¢6.7 billion, compared with 16.8 percent growth in the corresponding period of 2021. Operating expenses recorded 23.0 percent growth compared to 1.7 percent growth in the previous year,” Dr Addison, said.

The Governor pointed out that credit to the private sector showed considerable improvement, almost back to pre-pandemic levels and broadly in line with the uptrend in economic activities.

“In nominal terms, private sector credit recorded a significant annual growth of 26.5 percent in April 2022, compared with 6.9 percent, in April 2021. In real terms, however, private sector credit grew by 2.3 percent, due to sustained price pressures, relative to a contraction of 1.5 percent recorded for the same comparative period,” Dr Addison, stated.

He stressed “In terms of new advances, the data shows that credit growth continued to improve, reaching GH¢16.4 billion, representing a 56.5 per cent year-on-year growth.”