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More than half of Ghana’s 23 banks are in a strong enough position to avoid necessitating recapitalization, according to a World Bank assessment.
As stated in the Bank’s 8th Ghana Economic Update report, most banks have surpassed the planned three-year deadline by successfully achieving more than two-thirds of the mandatory recapitalization objective in less than a year.
The early completion of these recapitalization initiatives, according to the Bank of Ghana, is expected to increase the resilience of the banking industry and make it more capable of offering strong support for the real economy’s recovery.
The Bank of Ghana further stated that banks impacted by the Domestic Debt Exchange Programme (DDEP) in 2023 will still be carrying out their authorized capital restoration plans in compliance with guidelines issued by the Central Bank.
The banking industry is now stronger and more capitalized than it was under the DDEP, with higher profitability, according to the Bretton Woods institution’s 8th Ghana Economic Update, even if certain fresh risks still exist.
In particular, banks have experienced notable increases in profitability; in December 2023, return-on-equity after taxes increased to 34.2% from -34.4%. In a similar vein, return on assets rose over that time, rising from -3.8% to 5.4%.
The increased prudential norm of 10.0% was easily exceeded by the Capital Adequacy Ratio (CAR) of 13.9% in December 2023, owing to regulatory relief that prevented losses from the domestic debt restructure from being completely recognized.
Source: Ghanatodayonline.com
