Deposits of commercial banks grow steadily despite impact of COVID-19 – BoG

The latest Summary of Macroeconomic and Financial Data from the Bank of Ghana shows that the growth rate in commercial banks’ deposits has been positive throughout the year despite the impact of the COVID-19 pandemic on activities of businesses and individual households.

Total banking deposits increased by 27% year-on-year, from GHS78.9 billion in October 2019 to GHS100.2 billion in October 2020.

Per the data, despite the country recording its first COVID-19 case in March, followed by subsequent lockdowns and restrictions on movement as well as a slowdown of economic activity, total deposits from that period onwards has been growing steadily.

As of March 2020, total deposits in the banking sector was GHS84 billion. This jumped marginally to 84.4 billion in April, and has since risen every month, with October recording total deposits of GHS100.2 billion.

Meanwhile, growth in total advances in the banking sector which covers funds provided by banks to businesses on the other hand has seen a steady decline since March 2020.

Total advances grew by 13.7% in October 2020, about 3.5% lower than the 17.2% growth recorded in October 2019.

A further analysis of the data shows that the percentage of Non-performing Loans in the banking sector which covers any loan in which interest and/or principal payments are overdue only increased marginally during the year despite fears by stakeholders that the impact of the pandemic could lead to many businesses defaulting on loan repayment thereby worsening the NPL situation.

Responding to the observation at the last MPC press conference, the Governor of the Bank of Ghana Dr. Ernest Addison, stated that the marginal increase in NPLs from 14.5% in March to 15.3% in October could be as a result of the moratorium placed by banks on the repayment of some loans by their customers.

“We noted the marginal increase in our meetings, and we think that it’s too early to make any major assessments because we also know that we asked the banks to give moratoriums to their clients. It means that it’s only after the period that they’ve given these forbearances that we can determine which loans are performing and which ones are not really performing.”

source citibusinessnews.com

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