The assets of the industry grew by 26.4% in year-on-year terms during the period compared to the 35.2% growth for the same period in 2010, said the central bank in its Monetary Policy Committee (MPC) press conference December 21, 2011.
“In year-on-year terms, total assets of the banking industry grew by 26.4 per cent between January and October 2011 to GH¢20.6 billion compared with a 35.2% growth for the same period in 2010,” the press statement said.
It adds “The growth in assets was funded mainly by deposits which grew by 39.3% on a year-on-year basis to GH¢15 billion during the period, compared to GH¢10.8 billion in 2010.”
“Annual growth in broad money supply (inclusive of foreign currency deposits) firmed up to 38.1% at the end of October 2011, compared to 33.1% in October 2010. In nominal terms, total liquidity stood at GH¢16.9 billion at the end of October 2011. On a year-on-year basis, reserve money grew by 43.6% in November 2011 compared with 42.3% growth in the same period of 2010,” it continues.
According to the BoG governor Mr Kwesi Amissah-Arthur who is also chairman of the MPC, the banking system continued to show steady growth in assets and profitability, although at a relatively slower pace than a year ago.
Giving more details of the banking sector, Mr Amissah-Arthur noted that the financial soundness indicators in terms of earnings, liquidity and capital adequacy remained strong.
Although the Capital Adequacy Ratio (CAR) for the banking industry declined to 17.1% in October 2011 from 20.2% a year ago, the governor indicted that the industry CAR was well above the 10% benchmark.
The statement shows that non-performing loans (NPL) at the industry level remained high, although declining. “The NPL ratio improved to 15.3% in October 2011 from 16.9% in October 2010,” it added.
From lenders to borrowers
The BoG’s November 2011 Credit Conditions Survey highlighted in the statement revealed that there was an overall “net easing of credit stance for enterprises and households.”
“The easing in credit stance was the result of a number factors including improved capital position, access to market financing and competition from other banks” but access to credit by small and medium enterprises and for mortgages was tightened on account of increases in additional security requirements,” it said.
Credit to the private sector also grew steadily into the last quarter of the year.
“By the end of October 2011, it had increased by GH¢1.7 billion, on a year-on-year basis, to GH¢7.9 billion. In real terms, credit flow to the private sector recorded an annual growth of 16.9 per cent, compared to a decline of 0.2% a year earlier.”
On interest rates, the BoG said it has broadly trended downwards throughout the year.
On the money market, the 91 day and 182-dayTreasury bill rates declined to 9.6 and 10.8 per cent respectively in November 2011 from 12.3 and 12.7 per cent respectively in December 2010, it said.
The rates on the 1-year note, the report showed, also declined by140 basis points from the beginning of the year to 11.3% in November 2011 – while the 2-year fixed note rates went down by 60 basis points to 12.1% over the same period.
“The average three-month deposit rate of commercial banks fell to 7.8% in November 2011 from 10.5% in December 2010. Similarly, average savings deposit rate also declined to 4.4%, from 5.9% over the same period,” the BoG report highlighted with average base rate within the banking industry declining to 22.8% in November 2011 from 25.8% in December 2010.
By Ekow Quandzie