Banks recover strongly as deposits rise, bad loans decline

Ghana’s banking sector ended 2025 in a much stronger financial position, with banks improving their capital strength, reducing bad loans, and expanding lending activity.

These are signs that the industry is steadily recovering from recent economic shocks.

According to the latest industry analysis by the Ghana Association of Banks, Capital Adequacy Ratio in the industry rose sharply from 14% to 17.5% in 2025.

The Capital Adequacy Ratio measures a bank’s financial strength by comparing its capital to the risks it takes through lending and investments.

In simple terms, it shows how well banks can absorb losses and protect depositors during economic stress. Therefore, a higher CAR generally means a stronger and more stable banking sector.

The improvement is even more significant because banks achieved the gains largely without depending on temporary regulatory relief measures introduced during the economic crisis.

CAR without regulatory reliefs climbed from 11.3%to 17.5%, suggesting banks are increasingly relying on stronger internal financial positions.

The figures point to a banking industry that is gradually restoring stability after years of economic turbulence, rising inflation, debt restructuring pressures, and weakening loan quality.

Declining bad loans

At the same time, banks also made progress in cleaning up their loan books.

Non-performing loans, commonly known as bad loans declined from 21.8% to 18.9%.

More importantly, NPLs excluding fully impaired or loss-category loans dropped significantly from 8.5% to 5%.

The decline signals s stronger credit risk management, tighter lending standards and improved loan recovery efforts across the industry.

For businesses and depositors, stronger capital buffers mean banks are now better positioned to absorb financial shocks, support lending growth, and protect customer deposits during periods of economic uncertainty.

Financial position 

The sector also recorded strong balance sheet growth in 2025. Total banking sector assets increased by 21.5% from ₵ 367.8 billion in 2024 to ₵ 446.9 billion in 2025.

Deposits rose by 17.8% to ₵ 325.3 billion, while total loans and advances grew by 16% to ₵ 111 billion.

The growth in deposits suggests improving public confidence in the banking system, while the increase in lending signals a gradual return of credit support to businesses and households.

Overall, the latest figures indicate that Ghana’s banking sector is moving beyond crisis management and entering a more stable recovery phase, driven by stronger balance sheets, improved asset quality and more disciplined risk management.

Source: citinewsroom.com by Emmanuel Oppong