Following a difficult 2022, the banking industry in the country is showing promising signs of recovery, according to Dr Ernest Addison, Governor of the Bank of Ghana (BoG).
Speaking at a press conference following the conclusion of the 112th Monetary Policy Committee (MPC) in Accra, he stated that despite the impact of the Domestic Debt Exchange Programme (DDEP) and the generally challenging operating environment that affected banks’ financial performance, the sector saw a turnaround in performance during the first four months of 2023, following the closure of the DDEP.
“In the first four months of this year, prudential data show some turnaround in the banking sector’s performance following the conclusion of the DDEP, and following the consensus reached among stakeholders on the treatment of losses arising from the same,” He said.”
He continued by saying that banks have started rearranging their portfolios, putting more emphasis on short-term investments and new loans while reducing their holdings in medium- to long-term investments.
This follows the disclosure of significant losses incurred by banks in the audited financial statements for 2022. The main cause of these losses was the implementation of the DDEP (Dynamic Discounted Expected Provisions), which resulted in mark-to-market valuation losses on government bonds.
The banks also had to deal with rising operational costs and a surge in loan impairments, which added to their financial woes.
