Banks in Ghana wrote off Gh¢2.086 billion as bad debt in 2021, indicating data from the Domestic Money Bank’s Income Statement of the central bank.
The Ghc2.086 billion bank loans in 2021 was however a 4.7% decline over the previous year, 2020 in which the bad debts amounted to ¢2.183 billion.
According to the Monetary Policy Report, the bad debt was a result of factors including loan losses and depreciation.
The report also said asset quality risks remain high in 2022 compared to 2021 due to repayment challenges associated with the COVID-19 pandemic as well as some bank-specific loan recovery challenges.
It said the Non-Performing Loan (NPL) ratio increased from 14.8% in December 2020 to 15.2% in December 2021 due to an increase in the stock of NPLs by 16.0% to ¢8.2 billion, as well as modest growth in the stock of gross loans by 12.6% over the period.
However, the adjusted NPL ratio excluding the fully provisioned loan loss category improved to 5.8% from 6.5% in the previous year, an indication that the increase in the NPL ratio was due to a build-up of loss category loans.
It said the rise in the NPL ratio was mainly driven by a marginal increase in the private sector NPL ratio from 15.9% in December 2020 to 16.2% in December 2021, while the public sector NPL ratio increased from 3.3% to 6.1% over the same period.
The increase in ratio reflected mainly in the construction; agriculture, forestry and fishing; transport, storage and communication; and the commerce and finance sectors.
The NPL ratio of the construction and the agriculture, forestry and fishing, and the commerce and finance sectors increased by 12.7 percentage points, 9.2 percentage points and 2.9 percentage points to 35.2%, 29.0% and 20.3%, respectively, during the review period.
Additionally, the transport, storage and communication sector recorded an increase in its NPL ratio by 6.0 percentage points to 13.7% over the same comparative period.
The Central Bank said all other economic sectors recorded declines in the NPL ratios during the review period with the greatest improvement in the quality of the loan portfolio attributed to the electricity, water and gas sector.