BoG warns Savings and Loans Companies against rising cost of interest

The Bank of Ghana (BoG) has warned Savings and Loans Companies against increasing interest cost and non-performing loans in their books.

Explaining the dangers of increasing the cost of interest, Osei Gyasi, the Head of Banking Supervision mentioned that, the practice could initiate financial risks which may impede profitability.

According to the finance officer, this phenomenon is of major concern to the central bank as it is worried about the quality of financial assets.

He informed shareholders and customers that the central bank has identified some of these happenings which will need to be addressed as soon as possible.

“We have observed some marginal increases in Non- Performing Loans”, he said adding that “companies should manage this to improve the asset quality and enhance the profitability of their institutions.

“Savings and Loans companies will also have to diversify their funding sources to reduce the leverage ratio and also cut down interest cost otherwise, financial risk could crystalize. So these are the areas companies should be looking at to make more profit for shareholders, to improve customer confidence and profitability so they can lend more to grow the economy”, Osei Gyasi said while delivering his speech at the launch of the 20th anniversary of Bayport Savings and Loans in Accra.

On how to reduce the high cost of credit, Osei Gyasi urged financial service providers to vary their sources of funding.

EAN/BOG