Banks Record 10% Profit In 2017-BoG

Banks in Ghana recorded a profit of 10.0 percent at the end of December 2017, according to the Bank of Ghana’s latest Banking Sector report.

This is compared with 1.0 percent loss the previous year.
According to the report, the banking industry posted a stronger income statement performance in December 2017 compared with the performance in December 2016. This reflected in an improvement in the year-on-year growth of the industry’s net operating income from 4.3 percent in December 2016 to 11.1 percent in December 2017 on account of slowdown in the industry’s operating expenses, particularly staff costs.

However, the industry’s net interest income recorded a slower year-on-year growth from 17.3 percent to 12.6 percent during the period under review.
Both return on equity and return on assets moderated in December 2017 compared with the same period last year.

Balance sheet

According to the report, growth in the various components of bank’s balance sheet slowed in December 2017, compared with the same period in 2016. The banking sector’s total assets increased from GH¢81.22 billion, representing 28.1 percent year-on-year growth in December 2016 to GH¢93.22 billion (14.8 percent year-on-year) as at end-December 2017.

Banks’ gross advances growth moderated from 17.6 percent in December 2016 to 6.4 percent in December 2017, on account of tightened credit stance in response to high NPLs ratio.
The banking industry’s deposits stood at GH¢58.28 billion, a growth of 12.8 percent in December 2017 from GH¢51.66 billion in December 2016. Foreign currency deposits constituted 15.8 percent of total deposits in December 2017, with the remaining 84.2 percent being domestic currency deposits.

Assets and liability structure

Net advances, with a share of 33.3 percent remained the largest component of the industry’s total assets as at December 2017, although the share declined from 38.1 percent in December 2016. Instructively, investment in banks’ total assets was the second largest component of banks’ total assets with a share of 30.5 percent, up from 27.0 percent in December 2016.
Off balance sheet activities
Banks’ off-balance sheet items (contingent liabilities) grew by 22.4 percent to GH¢9.35 billion in December 2017, after contracting by 0.2 percent in December 2016.
The pick-up in the growth of banks’ contingent liabilities pointed to increased trade finance and guarantees over the period.

In conclusion, the Bank of Ghana said the banking industry remained profitable, solvent and liquid as at December 2017, despite some moderation in key Financial Soundness Indicators.
The sector’s performance it noted is expected to improve in the coming months as banks prepare towards meeting the new minimum paid-up capital of GH¢400 million. In this regard, the industry is likely to witness some consolidation.
Also, banks would embark on establishing stringent risk management frameworks for effectiveness, responsiveness and timeliness in dealing with risks to protect depositors’ funds. In addition, all banks will be Basel II/III compliant by close of the year.