The Bank of Ghana has projected a further decline in non-performing loans (NPLs) across the banking sector as new prudential regulations and supervisory measures begin to strengthen credit discipline and asset quality.
Governor Johnson Pandit Asiama made the remarks after the conclusion of the 130th Monetary Policy Committee meeting in Accra, where policymakers reviewed developments in the financial sector and broader economy.
According to the Governor, recent regulatory interventions introduced by the central bank are already improving risk management and credit administration among commercial banks.
“We expect that the non-performing loans ratio will go down further for commercial banks due to some of the guidelines that have been put in place.” - Dr Asiama
Banking Sector Shows Signs of Recovery
Latest data from the Bank of Ghana indicate that the banking industry’s NPL ratio declined from 23.6 per cent in April 2025 to 18.0 per cent in April 2026.
Excluding the loss category, the ratio fell further to 5.6 per cent from 9.0 per cent over the same comparative period, reflecting gradual improvements in asset quality and loan recovery efforts.
The broader banking sector also recorded stronger performance across key indicators. Total banking sector assets increased to GH¢493.9 billion in April 2026, compared with GH¢390.1 billion a year earlier.
Deposits rose sharply to GH¢365.5 billion from GH¢289.5 billion, while total advances grew to GH¢115.2 billion, representing annual growth of 25 per cent.
The Governor noted that despite economic pressures experienced in recent years, the banking sector remains “broadly stable, well-capitalised and liquid.”
New Reserve Requirement Takes Effect
The central bank also announced changes to the Cash Reserve Ratio framework as part of efforts to strengthen liquidity management within the financial system.
Dr Asiama disclosed that the Monetary Policy Committee had approved a uniform Cash Reserve Ratio of 20 per cent for banks, effective June 4, 2026.
The new requirement will be maintained entirely in domestic currency and is expected to simplify the reserve system while improving liquidity predictability for financial institutions.
Analysts say the move could help the central bank manage excess liquidity and support financial stability as interest rates continue to decline.
Lower Rates Support Credit Growth
The latest reforms come amid a sharp fall in domestic interest rates over the past year.
The policy rate dropped from 28.0 per cent in April 2025 to 14.0 per cent in April 2026, while the average lending rate declined to 16.33 per cent from 27.40 per cent.
Treasury bill yields also eased significantly, with the 91-day bill rate falling to 4.90 per cent from 15.47 per cent over the same period.
Private-sector credit growth has also strengthened, with nominal credit expanding by 28.7 per cent year-on-year in April 2026, while real private-sector credit growth stood at 24.5 per cent.
Despite the improving outlook, the Bank of Ghana maintains that banks must continue exercising caution in loan underwriting and balance-sheet expansion to ensure the recovery in asset quality remains sustainable.
READ ALSO: Government’s 24-Hour Economy Policy Risks Collapse Without Private Sector Incentives
