Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has cautioned that credit risks remain elevated in the banking sector despite significant improvements in asset quality and profitability across deposit money banks.
Speaking at the 127th Monetary Policy Committee (MPC) press conference on November 26, 2025, Dr. Asiama announced that deposit money banks remain sound, profitable and well capitalised, with financial soundness indicators showing relative improvement in year on year terms.
The Non Performing Loan (NPL) ratio declined to 19.5 percent in October 2025 from 22.7 percent in October 2024, driven by a pickup in bank credit and contraction in the stock of NPLs. The improvement represents a reduction of 3.2 percentage points within twelve months, signaling strengthening asset quality across the banking sector.
However, the Governor cautioned that despite this improvement, credit risks remain elevated. He stated that looking ahead, policy actions to recapitalise a few undercapitalised banks and full implementation of new regulatory guidelines aimed at reducing NPLs would further strengthen the banking industry.
Earlier in the year, Dr. Asiama attributed a significant portion of the banking sector’s NPL problems to the Domestic Debt Exchange Programme (DDEP) introduced by the previous administration. He noted that local banks experienced a disproportionate impact on their NPL problem, requiring efforts to strengthen risk management in these institutions going forward.
During the National Economic Dialogue in March 2025, the Governor revealed alarming disparities in NPL ratios across the banking sector, with one local bank recording an NPL ratio of about 81 percent, meaning for every 100 Ghana cedis lent, 81 cedis were not recovered. Another local bank recorded an NPL ratio of 62 percent, while the highest among foreign banks stood at around 21 percent.
The improved NPL ratio reflects enhanced credit recovery efforts, tightened lending standards and the overall economic recovery that has enabled more borrowers to service their loan obligations. The Bank of Ghana has introduced regulatory measures aimed at further reducing NPLs and has indicated plans to cap the non performing loan ratio at 10 percent by December 2026.
Dr. Asiama announced that financial soundness indicators, including solvency, profitability, asset quality and efficiency indicators, all point to relative improvement in year on year terms. The announcement came as part of the 127th MPC meeting, where the committee reduced the monetary policy rate by 350 basis points from 21.5 percent to 18 percent.
The interest equivalent of the 91 day benchmark rate eased to 10.6 percent in October 2025 from 25.8 percent in October 2024, while average bank lending rates declined to 22.2 percent compared with 30.5 percent in the same comparative period. This has triggered a gradual recovery in private sector credit growth.
From 7.1 percent contraction in May 2025, private sector credit growth in real terms improved to 5.4 percent in October 2025. The recovery in lending activity has been supported by the significant decline in interest rates and improved economic conditions across the country.
In April 2025, Dr. Asiama urged banks to moderate the pace of interest rate adjustments and sustain credit flow to viable enterprises, especially those in vulnerable sectors, despite a tightening monetary environment. He highlighted the importance of transparent communication with clients and the need for innovative lending solutions that protect credit access without undermining asset quality.
As of end February 2025, total banking assets had grown by 34.05 percent year on year while deposits increased by 27.89 percent. Additionally, the Capital Adequacy Ratio (CAR) stood at 14.35 percent, well above the 10 percent regulatory minimum temporarily established as part of regulatory forbearance measures.
In August 2025, Dr. Asiama called on the financial sector to assess its credit infrastructure as the era of high lending rates draws to a close. He said the consistent decline in inflation and the strengthening of the Ghana cedi had paved the way for a shift away from the tight monetary policy stance adopted over the past few years.
The Governor stressed the need for banks to overhaul their credit delivery systems and move away from their reliance on treasury instruments and high yielding government securities. He disclosed that the central bank would soon issue a directive on credit rationing and assessment, aimed at compelling financial institutions to strengthen credit appraisal processes and expand access to credit for viable businesses.
