Mr Ken Ofori-Atta, Minister for Finance

The banking and financial sector cleanup by the Bank of Ghana (BoG) has yielded huge dividends as the banks are now well-capitalised, liquid, and profitable, backed by strong buffers to support the country’s economic recovery process.

Minister for Finance Mr Ken Ofori-Atta who announced this when he presented the 2022 budget statement and economic policy of government to parliament on Wednesday, said the total assets of the banking industry, “increased by 16.9 per cent year-on-year to GH¢170.3 billion as of end-September 2021”.

He added that, “Banks reported a strong balance sheet position as of end-September 2021, albeit with marginal declines in the annual growth rates of some key balance sheet indicators this year compared to the same period last year.

 “This represents a decline in growth from the 22.2 per cent in September 2020, attributed to the lingering impact of COVID-19”.

Mr Ofori-Atta pointed out that the year-to-date growth in assets of 14.0 per cent in 2021.

This, he noted, “marginally exceeded the corresponding growth of 13.0 per cent in 2020, reflecting the gradual rebound in economic activities this year”.

“Mr Speaker, in summary, the regulatory reforms embarked on during 2017-2019 strengthened the banking sector and cushioned it from the severe effects of the COVID-19 pandemic. Additionally, the policy support and regulatory reliefs put in place at the height of the pandemic also contributed positively to the sector’s performance.

“The banking sector, therefore, continues to improve and remains resilient with strong capital buffers to withstand shocks and support the nation’s continued recovery from the shackles of the COVID-19 pandemic”, the Finance Minister told Parliament.


According to Mr Ofori-Atta, growth in investments moderated in September 2021, “as banks redirected a portion of additional liquidity flows into credit in the third quarter of 2021”.

Investments in bills and securities grew by 30.0 per cent year-on-year to GH¢81.2 billion as of end-September 2021 compared to a growth of 36.6 per cent in September 2020, he added.

Similarly, “year-to-date growth in Investments moderated to 26.1 per cent at the end of the third quarter of 2021 compared to a growth of 29.4 per cent in the same corresponding period last year.  Investments, however, remained the largest component of banks’ assets with a share of 47.7 per cent as of end-September 2021”.

Credit growth 

Mr Ofori-Atta said banks reported a gradual rebound in credit growth in September 2021, in line with projections of a net-ease in the stance on loans to enterprises and households and an increase in credit demand, as reported during the August 2021 round of credit conditions survey.

“Gross loans and advances in the year-to-September 2021 increased by 4.8 per cent compared to a lower growth of 1.7 per cent in the corresponding period last year.

“The annual growth rate of gross loans and advances, however, declined from 14.4 per cent to 9.0 per cent during the review period.

“The industry continued to record strong and sustained growth in deposits attributed to liquidity flows within the domestic economy.

“Deposits recorded a robust albeit lower growth of 16.4 per cent to GH¢113.8 billion as of end-September 2021, relative to the 23.8 per cent growth recorded a year earlier.

“The COVID-19 fiscal stimulus packages, payments to contractors, SDI depositors, and clients of SEC-licensed fund managers, as well as increased savings by individuals and firms from the pandemic-induced slowdown in consumer and investment spending in some sectors, contributed to the observed growth in total deposits”, Mr Ofori-Atta added. 

Financial indicators

The Minister for Finance also disclosed that “the financial soundness indicators remained healthy in September 2021, reflecting robust solvency, liquidity, and profitability indicators.

“The industry solvency position remained robust with a CAR (Capital Adequacy Ratio) of 19.9 per cent in September 2020, marginally lower than the CAR of 20.3 per cent in September 2020, reflecting the recent gradual rebound in credit.  The CAR was, however, well above the regulatory minimum of 11.5 per cent, pointing to the ability of banks to further deepen intermediation and shows that banks have adequate buffers to moderate potential losses from such increased lending during the current uncertain operating environment”. 

Repayment challenges

Mr Ofori-Atta said general repayment challenges associated with the COVID-19 pandemic, as well as some bank-specific difficulties with recoveries on the loan portfolio, contributed to a “marginal” increase in the NPL (Non-Performing Loans) ratio from 15.8 per cent in September 2020 to 16.8 per cent in September 2021.

This, according to him, was attributed to the combined effect of an increase in the stock of NPLs by 16.4 per cent to GH¢8.4 billion, as well as a modest growth in the stock of gross loans by 9.0 per cent over the period.

The adjusted NPL ratio (excluding the fully provisioned loan loss category), however, improved from 6.7 per cent to 6.5 per cent over the review period.

The industry’s profitability performance, Mr Ofori-Atta added, remained robust but represented a moderation in September 2021 compared with the same period last year.


Mr Ofori-Atta noted that profit-after-tax growth for the first three quarters of the year compared to the same period last year moderated from 22.0 per cent to 18.9 per cent on account of a moderation in the growth of banks’ net interest income from 20.0 per cent to 18.2 per cent.

“This was on the back of higher growth in interest expenses during the review period (from 8.1 per cent to 15.9 per cent), which partially offset the increase in banks’ interest income (from 16.0 per cent to 17.5 per cent)”, he added.   

Mr Ofori-Atta said growth in operating expenses was marginally lower at 10.3 per cent in September 2021 relative to the 10.4 per cent growth a year earlier, reflecting the sustained cost minimisation strategies of banks.

“Despite the moderation in profit growth, the sector’s profitability indicators improved during the review period, reflecting the moderation in growth in assets and equity. Banks’ Return on Assets (ROA) improved to 4.6 per cent from 4.2 per cent while Return on Equity (ROE) increased barely marginally to 21.1 per cent in September 2021 from 21.0 per cent September in August 2020. 

“The assessment indicates that the banking sector remains strong, with key financial indicators pointing to a solvent, liquid, and profitable sector. Banks also continue to hold adequate buffers to moderate any credit and liquidity shocks”.