The Deputy Chief Executive Officer of Ghana Association of Bankers, Mr John Awuah, has revealed that advent of the COVID-19 pandemic has slowed down banking business and increased risk of impact on loan performance.

COVID-19 has had negative impact on the economy and the banking sector as economic activities had taken a downturn with growth projected to be 1.5 per cent compared to an earlier outlook of 6.5 per cent for 2020, he said.

Mr Awuah explained that some sectors of the economy have had zero cash inflows during the pendency of the pandemic especially Aviation, hotels and resorts, bars and restaurants.

Mr Awuah said this at the Second Edition of Webinars organised by Integrity Magazine, a subsidiary of Krif Ghana Limited, on the theme: “Effects of COVID -19 On Corporate Ghana- The Banking Sector- Part 1”

He said economic projection of the COVID-19 was that, “It will take much longer for businesses and households to return to normal operations with its consequential impact on the ability to perform on existing obligations resulting in heightened probability of increased non- performing loans”.

Mr Awuah outlined some post-Covid-19 activities by the banks amongst which were credit expansion to productive sectors such as the manufacturing and small and medium enterprise financing.

Others measures were for banks to invest heavily to enhance Fintech capabilities, whilst Government introduced policy initiatives to redirect trajectory of credit expansion and the Banking Regulator to proactively balance the need for regulatory prudence and inertia post COVID-19. 

He said banks had a duty to anchor the economy by cautiously continuing with credit expansion to productive sectors among others.

He also mentioned that banks have cut interest rates by between 1.5 per cent and 3.5 per cent. In addition, a total of 1.6 billion Ghana cedis of Payment Holidays had been granted to selected customers with specific needs during this COVID-19 period.

The Reverend Mrs Patricia Sappor, President of the Chartered Institute of Bankers, said the banks had begun to aggressively drive the digital agenda whilst encouraging customers to jump onto the digital train using channels like Mobile Apps, USSDs, Internet Banking, and ATMs to facilitate transactions.

“One of the key impacts of the current pandemic is the emphasis on social/physical distancing and contactless payment options. The situation presents financial institutions with the opportunity for digital transformation both at the front and back office levels.”

“This, if done effectively, could result in efficient service delivery, quicker turn-around time and improvement in the overall service experience for bank customers,” she noted.

Rev. Sappor explained that investing in large and expensive edifices to accommodate employees could be curtailed as banks have found ways for workers to work more remotely and digitally.

“This will reduce the operating costs of banks since lesser expenses on utilities and depreciation are incurred”.

She said banks have had to re-strategize and re-prioritize projects due to the COVID-19 pandemic.

“Banks can no longer go back to their old ways of operating since the needs and psyche of customers have changed significantly as a result of COVID-19”.

“In a nutshell, low transactional volumes will result in low profitability, low deposits, and significantly, high Non-Performing Loans and high operating costs are some of the adverse impacts to be envisaged by financial entities as a result of COVID-19.”

She said banks should proactively stay in touch and build good relationships with their clients supporting them in these difficult times.

Rev. Kennedy Okosun, the Publisher and Editor-in-Chief of the Integrity Magazine, called on stakeholders to find out how banks and other financial institutions in Ghana could better protect themselves from the harsh effects of the lockdown and still play their important role as “engine of growth.”

He said through such webinars solutions would be proposed as to the way forward for policy makers and industry players to reduce the biting effect of the Covid-19 on corporate Ghana.