The 23 banks currently operating in Ghana registered an after-tax profit of GH¢549.70 million, a 31.5 percent year-on year growth for the first two months of the year, the Bank of Ghana’s March 2019 Banking Sector Report has revealed.
This is against the 14.0 percent growth recorded for the same period last year.
According to the report, the higher growth in net profit was underpinned by an increase in the growth of net interest income coupled with a slowdown in the growth of operating expenses and total provisions.
Importantly, net interest income grew by 17.9 percent on account of higher interest income from investments and lower borrowing cost from reduced borrowings resulting from the strong deposits mobilization.
Fees and commissions however inched up by only 0.4 percent compared to the 16.8 percent growth witnessed during same period last year. This was largely due to the slowdown in the volume of off- balance sheet activities which dipped during the first two months as noted earlier.
Growth in operation was somehow contained at 7.7 percent, lower than the previous year’s growth of 8.6 percent, due largely to efficiency gains from bank consolidations and the rationalization of bank branches. This also contributed to lower growth in provisions for fixed assets.
Total provisions (on loans and fixed assets depreciation) grew by only 2.2 percent, significantly lower than the 11.9 percent recorded for the same period a year earlier on account of reduction in fixed assets and lower NPLs.
The improved profitability levels during the period under review positively reflected in the main indicators, namely, after-tax Return on Equity (ROE) and before-tax Return on Assets (ROA).
The industry’s ROE increased to 20.1 percent in February 2019 from 19.0 percent in February 2018. Similarly, the ROA measured increased to 4.2 percent from 4.0 percent during the same comparative period, pointing to improved profitability within the banking industry.
The Finder