Banks NPLs ease to 18.9% in December 2025, however stay increased – BoG – Life Pulse Daily

Introduction

Ghana’s banking financial management has proven indicators of growth in asset high quality, with the Non-Performing Loan (NPL) ratio declining to 18.9% in December 2025 from 21.8% in 2024, in keeping with the Bank of Ghana (BoG). While this marks originality, the ratio stays considerably increased in comparison to international benchmarks, underscoring ongoing demanding situations within the monetary gadget. This article explores the criteria in the back of this growth, the consequences for banks and debtors, and what the longer term would possibly hang for Ghana’s banking financial management.

Key Points

Background

Non-Performing Loans (NPLs) are loans the place debtors have didn’t make scheduled bills for a specified length, usually 90 days or extra. High NPL ratios point out monetary rigidity within the banking financial management, as they scale back profitability and prohibit banks’ skill to lend. Ghana’s banking financial management has struggled with increased NPLs for years, pushed by means of components comparable to financial downturns, company defaults, and lax credit score underwriting requirements.

In fresh years, the Bank of Ghana has applied more than a few measures to handle this factor, together with stricter rules, enhanced organization, and focused interventions to unravel legacy loans. These efforts have begun to yield effects, as evidenced by means of the decline within the NPL ratio in 2025.

Policy Measures and Their Impact

The Bank of Ghana has been proactive in addressing the NPL problem. Key measures come with:

• Resolving Legacy Loans: The central financial institution has labored to spot and unravel loans which were non-performing for a longer length. This contains restructuring loans and pursuing prison motion towards willful defaulters.
• Enforcing Credit Underwriting Standards: Banks are actually required to stick to stricter standards when issuing loans, lowering the possibility of defaults.
• Addressing Willful Defaults: The BoG has taken steps to carry debtors in control of planned defaults, deterring such habits sooner or later.

These measures have contributed to the development in asset high quality, despite the fact that demanding situations stay.

Analysis

The decline within the NPL ratio to 18.9% is a favorable profit, however it is very important contextualize this determine. Globally, a wholesome NPL ratio is usually under 5%, which means Ghana’s banking financial management nonetheless faces important demanding situations. The growth, on the other hand, means that the central financial institution’s efforts are bearing fruit.

The easing of the coverage fee is some other issue that would make stronger additional enhancements. Lower rates of interest scale back the price of borrowing, making it more uncomplicated for companies and folks to pay off loans. This, in flip, can assist scale back the collection of non-performing loans.

Banks’ write-offs of GH¢1.39 billion in dangerous debt additionally point out a willingness to scrub up their stability sheets. While this can be a vital step, it additionally highlights the size of the issue. The 56.7% building up in write-offs in comparison to October 2024 means that banks are changing into extra competitive in addressing non-performing property.

Financial Soundness and Sector Performance

Despite the prime NPL ratio, the banking financial management’s general efficiency in 2025 used to be sturdy. Total property grew, pushed by means of will increase in home deposits, borrowings, and shareholders’ price range. Investments additionally noticed important approach, reflecting banks’ efforts to diversify their portfolios.

The newest monetary soundness signs display that the financial management stays solvent, successful, and environment friendly. This means that whilst NPLs are a priority, the banking gadget is basically wholesome and in a position to weathering demanding situations.

Practical Advice

For banks, the point of interest will have to stay on keeping up strict credit score underwriting requirements and actively managing non-performing loans. This contains common tracking of debtors, early intervention in instances of economic misery, and efficient restoration methods.

For debtors, it will be important to prioritize mortgage repayments and keep up a correspondence with lenders if dealing with monetary difficulties. Proactive engagement can assist save you loans from changing into non-performing and give protection to credit score ratings.

For policymakers, endured make stronger for the banking financial management is very important. This contains keeping up a strong macroeconomic setting, making sure get entry to to liquidity, and offering incentives for banks to lend responsibly.

FAQ

Conclusion

The growth in Ghana’s NPL ratio to 18.9% in December 2025 is a favorable step, reflecting the effectiveness of the Bank of Ghana’s coverage measures. However, the ratio stays increased, highlighting the desire for endured efforts to handle the underlying demanding situations. By keeping up strict credit score requirements, supporting debtors, and fostering a strong financial setting, Ghana can additional toughen its banking financial management and advertise sustainable approach.

Sources

• Bank of Ghana (BoG) – Financial Stability Report 2025
• Domestic Money Banks Income Statement – October 2024
• Life Pulse Daily – Breaking News: Banks NPLs ease to 18.9% in December 2025
• Life Pulse Daily.com – Additional reporting and research