Commercial banks’ willingness to financially support businesses recover from the impact COVID-19 hinges on the rate of response they show towards the government’s stimulus packages rolled out to alleviate the effect of the pandemic on their operations, the Chief Financial Officer (CFO) of Fidelity Bank, Atta Yeboah Gyan has said.

According to him, banks have over the years been the most responsive to government policies and would not shy away from supporting businesses to rebound from economic perils caused by the pandemic if these businesses properly utilize government stimulus packages to sustain their operations.

Speaking at the maiden edition of ‘The Money Summit’ organised by the Business and Financial Times (B&FT), Mr. Gyan said: “banks take calculated risks; they pick and choose sectors that they are likely to benefit from. I believe that the rate of support will depend on the recovery effort.

"When sectors are identified as responding to government stimulus packages and to the uptake in the economy, banks would be the first players to go in there and support. We are looking out for signals that there is recovery and once that is available, banks would top-up.”

Already, government, through the National Board for Small Scale Industries (NBSSI) now Ghana Enterprise Agency (GEA) and selected commercial banks is disbursing a GH¢1 billion Coronavirus Alleviation Programme (CAP) business support scheme intended to support small and medium-scale enterprises (SMEs) impacted COVID-19.

The Ghana CARES (Obaatanpa) programme, an unprecedented GH¢100 billion post-COVID-19 programme to stabilize, revitalize and transform the economy to create jobs and prosperity over a three-year period is near implementation.

The commercial banks say the success of these initiatives are critical to the financial sector and would attract them to further invest in the real sectors of the economy than to play it safe and buy government securities.

“Banks take delight in supporting the real sector than lending to government. We make more profit lending to the private sector than lending to government. We have seen a downward trend in the interest we make from government investments, so our preference is lending to the private sector where our spreads are high,” Mr. Gyan told the paper.

His comment comes on the back of data from the Bank of Ghana that shows that commercial banks have lent more to government than to the private sector.

“Banks are among the most responsive sectors when it comes to responding to government policies; you might not have seen the growth in terms of gross loans as you expect but banks were the true supporters of the economy during the pandemic.

"As part of government measures to mitigate the impact of the pandemic, the Bank of Ghana reduced the policy rate from 16 to 14.5 percent to help the banks support critical sectors of the economy at the time, the banks responded by reducing interest rate. On average there was a 1-2 percent reduction on loans to sectors that were hard hit by the pandemic. This is not an extension of additional credit but a support to the sector during the crisis.”

He added that: “banks also extended credit to sectors that were critical for the nation in the fight against the pandemic. The health sector gained as banks supported the import of equipment; pharma and alcohol industry got some support to produce hand sanitizers etc; these were direct credit extension.

For sectors that were hard hit like the hospitality industry, we had to restructure their loans. You may not see these as an extension of additional credit, but it doesn’t water down the fact that the banks supported critical sectors of the economy during the pandemic.”