Banks are responding to improved monetary policy conditions – John Awuah
The Chief Executive Officer of the Ghana Association of Banks, John Awuah, has defended the banking sector’s lending practices, arguing that a decline in borrowing costs and strong private sector credit growth demonstrate that banks are responding to improving monetary conditions. He said the Bank of Ghana’s decision to maintain the monetary policy rate at […]
John Awuah, CEO of the Ghana Association of Banks, defended the sector's lending practices amid lower borrowing costs and robust private sector credit growth, indicating banks are adapting to improved monetary conditions. He highlighted the Bank of Ghana's decision to maintain the policy rate at 14% as a strategic move to assess global impacts on the banking sector.
Data from the MPC showed private sector credit rose by 29% year-on-year in real terms. Despite the central bank's rate stability since March, commercial rates have declined from 18% to approximately 15.9%. This decrease, Awuah explained, includes legacy exposures but new loans offer rates between 9-12%. The average lending rate of 15.9% accounts for these factors.
However, Ghana's high non-performing loan (NPL) ratio of 15.8% hinders affordable credit expansion, compared to lower ratios in Togo (under 10%), Côte d'Ivoire (under 7%) and Nigeria (under 9%). Awuah emphasized that loan recovery efficiency is crucial to prevent losses and enable further lending to other borrowers. He urged policymakers to focus on underlying factors causing higher credit costs in Ghana, beyond just lending rates.
Awuah affirmed banks' commitment to lending, arguing that reduced risks would enable competitive rates.
Written by urgent.news from MyJoyOnline Ghana's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
