Financial sector healthier than ever after clean up – BoG boss

Financial sector healthier than ever after clean up – BoG boss
Ernest Addisson, BOG Governor

 

 

The Governor of the Bank of Ghana, Dr. Ernest Addison has said the current financial sector is healthier than before.The sector is emerging from a crisis that resulted in the loss of millions of investments, and thousands of jobs.

 

Speaking at the University of Ghana’s annual New Year School on Tuesday, the Central Bank Governor said the country is emerging from the financial crisis stronger than ever.

 

 

“The Bank of Ghana has every reason to feel confident about gains and achievements made so far in the financial sector. The sector is healthier, is better able to withstand financial shocks, compared to what we inherited at the beginning of 2017.”

 

“It is better capitalised, it is more liquid and profitable, it is more efficient and has adequate available assets,” Dr. Addison said. The financial sector clean-up commenced by the Akufo-Addo

 

 

administration in August 2017 led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.

 

 

Most recently, the Securities and Exchange Commission (SEC) announced the revocation of licenses of 53 Fund Management Companies.The total estimated cost of the state’s fiscal intervention, excluding interest payments, from 2017 to 2019 is estimated at GHS16.4 billion.

 

 

Slowed growth

The growth rate in commercial banks’ deposits has however slowed down amidst the reforms undertaken by the central bank to strengthen the sector.

 

 

The Bank of Ghana in its latest banking sector report stated that deposits, as the main source of funding for the banking industry, grew by 17.1 percent in October 2019, marginally lower than the 20.7 percent increase in the previous year.

 

 

The central bank report means that although bank total deposits still grew in the period under review, the rate of growth fell short of what was achieved a year earlier.

 

 

The total banking sector deposits increased to GH¢78.90 billion by GH¢11.51 billion in October 2019 from GH¢67.38 billion in October 2018. Despite the slowdown in growth rate, the Bank of Ghana maintains that the sheer growth points to a renewed confidence in the banking sector following the reforms.

 

 

According to the report, domestic deposits grew at the same pace as total deposits to GH¢78.50 billion in October 2019 from GH¢67.04 billion in the previous year, while deposits of non-residents remained small at GH¢397.70 million from GH¢342.10 million.