Ghana's banking sector is facing headwinds as Non-Performing Loans (NPLs) continue to rise. According to the Bank of Ghana's July 2025 MPC report, the total stock of NPLs reached GH¢20.7 billion in June 2025. This represents a 1.3% increase from GH¢20.4 billion in June 2024, translating to a substantial 49.4% year-on-year growth.
Despite the overall increase, the report indicates some signs of improvement in the industry's asset quality. The NPL ratio saw a decline, dropping to 23.1% in June 2025 from 24.2% the previous year. When factoring in fully provisioned loan losses, the NPL ratio further decreases to 8.5% from 10.8%, suggesting a reduction in sub-standard non-performing loans.
The Bank of Ghana attributes this decline in the NPL ratio to the slower growth in the NPL stock compared to the overall growth in total loans. However, concerns remain regarding the concentration of NPLs within specific sectors.
Private Sector Bears the Brunt
The private sector continues to be the primary driver of non-performing loans, accounting for a significant 96.4% of the total NPLs in June 2025, a slight increase from 95.6% in June 2024. Conversely, the public sector's share declined to 3.6% from 4.4%.
Sector-Specific Challenges
Certain sectors are experiencing more acute challenges than others. The commerce and finance sector recorded the highest NPL ratio at 27.0%, a notable increase from 19.7% a year ago. The agriculture, forestry, and fishing sectors also saw increases in their NPL ratios. The services sector saw a decrease, while the manufacturing sector's ratio remained unchanged.
Industry experts are worried about the impact of rising NPLs on efforts to reduce lending rates. Financial institutions typically consider NPL ratios and borrower payment delays when pricing loans. Some businesses attribute delayed loan repayments to government delays in paying contractors. These delays make it difficult for businesses to meet their financial obligations.
Addressing the rising NPLs is crucial for maintaining the stability and growth of Ghana's banking sector. Further analysis and targeted interventions are needed to mitigate the risks and support businesses in managing their debt obligations.