The Ghanaian banking industry recorded negative 5.4 percent growth in the year 2015 signaling a difficult financial year, according to the latest Bank of Ghana’s Financial Stability report.
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According to the CenÂtral Bank, growth in the sector’s income before tax registered a negative growth over the period from 34.9 percent in DeÂcember 2014 to negative 5.4 percent in December 2015.
Similarly, the industry’s net profit after tax conÂtracted by 10.5 percent in December 2015 compared with a growth of 35.5 perÂcent in December 2014.
Already, financial stateÂments released by some players in the industry inÂdicate loses and reduction in their bottom-lines.
Indeed, the regulator confirmed that there were marginal declines in key financial soundness indiÂcators in the fourth quarter of 2015 though the doÂmestic banking sector reÂmained sound and solvent during the period.
The report noted that interest income from loans continued to be the main source of income for the banking industry, constiÂtuting 51.5 percent of total income in December 2015 compared with 45.5 perÂcent in December 2014. Investment income share of 29.3 percent of total inÂcome in December 2015 was marginally above the 29.2 percent recorded in December 2014.
The share of income from fees and commission however declined to 11.6 percent in December 2015 from 12.8 percent in DeÂcember 2014.
Also, indicators of opÂerational efficiency showed deterioration in 2015, mainly because of the energy challenges which bloated the operaÂtional cost of banks and increased staff cost.
Cost to income ratio inÂcreased to 84.6 percent in December 2015 from 76.4 percent in December 2014 while cost to total assets ratio increased to 15.2 perÂcent in December 2015 from 12.6 percent in DeÂcember 2014.
Similarly, operational cost to total assets inÂcreased to 9.7 percent in December 2015 from 8.5 percent in December.
Operational cost to gross income also inÂcreased from 51.4 percent in December 2014 to 53.9 percent in December 2015.
On liquidity, the liquidÂity conditions of the bankÂing sector however tightened in December 2015. All indicators of liqÂuidity decreased but genÂerally remained within acceptable thresholds durÂing the period under reÂview.
According to the CenÂtral Bank, growth in the sector’s income before tax registered a negative growth over the period from 34.9 percent in DeÂcember 2014 to negative 5.4 percent in December 2015.
Similarly, the industry’s net profit after tax conÂtracted by 10.5 percent in December 2015 compared with a growth of 35.5 perÂcent in December 2014.
Already, financial stateÂments released by some players in the industry inÂdicate loses and reduction in their bottom-lines.
Indeed, the regulator confirmed that there were marginal declines in key financial soundness indiÂcators in the fourth quarter of 2015 though the doÂmestic banking sector reÂmained sound and solvent during the period.
The report noted that interest income from loans continued to be the main source of income for the banking industry, constiÂtuting 51.5 percent of total income in December 2015 compared with 45.5 perÂcent in December 2014. Investment income share of 29.3 percent of total inÂcome in December 2015 was marginally above the 29.2 percent recorded in December 2014.
The share of income from fees and commission however declined to 11.6 percent in December 2015 from 12.8 percent in DeÂcember 2014.
Also, indicators of opÂerational efficiency showed deterioration in 2015, mainly because of the energy challenges which bloated the operaÂtional cost of banks and increased staff cost.
Cost to income ratio inÂcreased to 84.6 percent in December 2015 from 76.4 percent in December 2014 while cost to total assets ratio increased to 15.2 perÂcent in December 2015 from 12.6 percent in DeÂcember 2014.
Similarly, operational cost to total assets inÂcreased to 9.7 percent in December 2015 from 8.5 percent in December
Operational cost to gross income also inÂcreased from 51.4 percent in December 2014 to 53.9 percent in December 2015.
On liquidity, the liquidÂity conditions of the bankÂing sector however tightened in December 2015. All indicators of liqÂuidity decreased but genÂerally remained within acceptable thresholds durÂing the period under reÂview.
Domestic assets comÂponent of total assets inÂcreased by 24.1 percent to GH057.98 billion at the end of December 2015 compared with 39.9 percent growth recorded for the same period in 2014. Growth in foreign assets slowed down from the 69.4 perÂcent recorded in DecemÂber 2014 to 12.5 percent growth in December 2015.
The Central Bank concluded that Ghana’s banking sector continued to be sound and solvent as evidenced by key fiÂnancial soundness indiÂcators, though there has been some deterioration in asset quality and effiÂciency.
It added that the banking industry’s performance is expected to pick up with the improvement in the energy supply, ongoing fiscal consolidation reflected in the lower Treasury bill rates and relative stability in the exchange rate.
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