Banks operating in Ghana wrote off GH¢1.23 billion in the first half of 2026 as loan-loss provisions increased sharply, highlighting continuing asset-quality risks in the banking sector.
The amount, classified as loan losses and depreciation, represents a 38 percent year-on-year increase from the GH¢893.0 million recorded in June 2025, according to the highlights of the Domestic Money Banks’ Income Statement.
The increase comes despite an improvement in key indicators of credit quality, suggesting that banks continue to face vulnerabilities from non-performing loans and are maintaining significant provisions against potential losses.
According to the July 2026 Monetary Policy Report, asset-quality risks remained elevated in the banking sector as of June 2026, although several indicators recorded improvements over the 12-month period.
The industry’s non-performing loan (NPL) ratio declined to 16.1 percent in June 2026, from 23.1 percent a year earlier.
Similarly, the NPL ratio adjusted for the fully provisioned loan-loss category fell significantly to 4.6 percent, compared with 8.5 percent in June 2025.
The stock of non-performing loans also declined, dropping to GH¢19.9 billion in June 2026 from GH¢20.7 billion in the corresponding period of 2025.
The improvement in these indicators points to some easing in credit-risk pressures across the sector. However, the central bank maintained that asset-quality vulnerabilities remain a concern, particularly given the continued concentration of bad loans within private-sector lending.
Private sector dominates NPLs
The composition of non-performing loans continued to mirror the structure of banks’ credit exposure, with the private sector accounting for the overwhelming majority of problem loans.
The private sector’s share of total NPLs increased to 98 percent in June 2026, from 96.4 percent in June 2025.
In contrast, the public sector’s contribution to NPLs declined to 2 percent, from 3.6 percent over the same period.
The figures indicate that while the banking industry has made progress in reducing the overall stock and ratio of bad loans, private-sector borrowers remain the main source of credit stress.
The continued high level of provisions also reflects banks’ efforts to strengthen their balance sheets against potential losses from impaired loans.
The rise in loan-loss provisions therefore comes at a time when banks are simultaneously reporting improved asset-quality indicators, pointing to a more cautious approach to credit-risk management.
The reduction in the NPL ratio and the stock of bad loans provides some indication that previous asset-quality pressures are easing. However, the high concentration of NPLs among private-sector borrowers means that vulnerabilities remain significant.
For banks, the challenge will be to sustain the improvement in asset quality while expanding credit to the private sector, particularly as lower interest rates and improving macroeconomic conditions are expected to support increased lending.
The June data therefore presents a mixed picture: bad loans are declining, but banks continue to set aside substantial resources to absorb potential credit losses.
Source: businesspostonline
