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Business News of Friday, 27 November 2020

Source: thebusiness24online.net

Credit to private sector improves amid recovery in economic activities

The Bank of Ghana Headquaters [Credit Bloomberg] The Bank of Ghana Headquaters [Credit Bloomberg]

Credit to the private sector grew at a faster pace in October compared with a year ago, as the economy recovers from the effects of COVID-19.

Central bank data show that the year-on-year growth in private sector credit stood at 13.4 percent in October compared with 13.1 percent in October 2019.

The total value of outstanding loans to the private sector increased to GH¢42.1bn from GH¢37.1bn within the period, according to the data.

Nevertheless, year-on-year credit growth remains below its peak of 19.7 percent in March 2020, when the country began to record cases of the novel coronavirus.

Governor of the central bank Dr. Ernest Addison, during the monetary policy committee press briefing on Monday, indicated that the latest credit conditions survey conducted in October show a net easing in overall credit stance on loans to enterprises and households.

“The survey results showed that with the recovery in economic activities underway, demand for loans over the next two months is also expected to rise,” he stated.

Results during the previous credit conditions survey in August 2020 pointed to a net tightening in overall credit stance on loans to enterprises. This tight credit stance, the central bank indicated, was a reflection of the uncertainty surrounding the duration, scale, and impact of the pandemic on banks’ operations.

Banking sector performance

Data on the banking sector show that total assets grew by 23.7 percent year-on-year to GH¢150 billion in October, while deposits also recorded an annual growth of 27 percent to GH¢100.2 billion. Total advances—to both public and private sector borrowers—also went up by 13.7 percent year-on-year to GH¢47.4 billion over the period.

The governor said the banking sector remains liquid, profitable and well-capitalised, with strong buffers to withstand adverse shocks and support the country’s recovery from the pandemic.

“The Financial Soundness Indicators and the Banking Sector Stability Index remain in high positive territories. The industry’s capital adequacy requirement (CAR) of 20 percent as at end-October 2020 remains well above the regulatory minimum threshold. Asset quality has also improved,” he said.