Ghana’s total Non-performing Loans - NPLs has hit a record high of Ghc8 billion between June 2016 and June this year – 2017.
The development was captured in the latest Banking Stability Report release by the Bank of Ghana.
According to the report, the NPL ratio as of June 2017 stood at 21.2% as compared to 18.8% recorded in the same period last year.
Furthermore, the private sector remains the highest contributor to the high NPL figure with Ghc7.6 billion representing over 95% of the total Non-performing Loans.
“Private sector, being the largest recipient of outstanding credit balances also accounted for the greater proportion of banks’ NPLsâ€, the report stated.
Non-performing Loans has increasingly been spotted as the most significant problem of Ghana’s financial sector – specifically the banking industry.
It was identified as playing a crucial role in the eventful collapse of two of the country’s former prominent banking brands – UT & Capital banks, and there are speculations if that is not addressed will result in the fall of even more of such institutions in Ghana.
On the other hand, the report also revealed that the reforms of the country’s tax policies as well as the Tema Oil Refinery (TOR) contributed to the low NPLs accrued to the Public Sector.
However, the Commerce & Finance, the Services and the Electricity, Gas & Water sectors still accounted for majority of the public sector’s share of the NPLs.