Ratings firm says Ghana bank NPLs 16.1%

A ratings firm said Ghana's banks had a non-performing loan ratio of 16.1%, keeping credit risk elevated after the sovereign default and subsequent debt restructuring. Reaction pending.

16.1% NPL ratio cited

The firm said years of macroeconomic instability, the government default and the debt restructuring weakened asset quality and left the banking system exposed. Data showed the 16.1% figure compares with pre-crisis levels that were materially lower, the firm said, reducing buffers available to absorb further shocks.

The ratings firm warned that sustained high NPLs hamper banks' ability to extend new credit and slow balance-sheet repair. It highlighted provisioning needs and capital adequacy as pressure points, saying banks will face tighter lending capacity unless asset-quality trends reverse.

Regulators and market participants, the firm added, should monitor loan-recovery rates, provisioning coverage and funding costs as indicators of whether banks can restore normal credit flows. Higher funding costs or weaker recoveries would make balance-sheet repair more difficult and could raise borrowing costs for households and firms.

If NPLs do not fall below 12% by December 31, 2026, lenders could face bigger provisioning requirements and may have to scale back new lending, prolonging credit constraints in the economy.