S&P Global Ratings has warned that Ghana’s banking sector Non-Performing Loan (NPL) ratio of 16.1% as of June 2026 remains too high, citing the lingering effects of the Domestic Debt Exchange Programme (DDEP), government arrears to suppliers and contractors, and exchange-rate and inflationary pressures on households and businesses.
In its latest rating assessment of Ghana, the US-based ratings agency said credit risk in the banking system remains elevated after years of macroeconomic instability, the government’s default, and the debt restructuring.
The assessment strikes a more cautious tone than the Bank of Ghana’s own characterisation of the sector’s recovery, and comes as the central bank presses banks to cut bad loans to 10% by the end of 2026.
13 Banks Needed Recapitalisation After DDEP
S&P noted that after the domestic debt restructuring in 2022, 13 local banks required recapitalisation. While most have met the recapitalisation requirements, S&P said five of them—including one state-owned bank—are still undercapitalised.
“Although most have met the recapitalization requirements, five of them (including a state-owned bank) are still undercapitalised,” the agency stated.
That assessment is contrary to the Bank of Ghana’s assertion that all banks have met the new minimum capital requirement. The IMF has reported that the recapitalisation of state-owned banks—the National Investment Bank, the Agricultural Development Bank, and the Consolidated Bank Ghana—was completed by the end of 2025, with full recapitalisation enforced for two lagging private-public banks by June 2026.
The Bank of Ghana has previously acknowledged that it is weighing a deadline extension for one of the two banks struggling to meet minimum capital requirements, with Governor Johnson Pandit Asiama saying in March 2026 that “out of the two banks, one is making significant progress towards meeting the recapitalisation requirements, and we may consider granting that institution an extension.”
The DDEP, launched on December 5, 2022, required banks and other financial institutions to exchange existing government bonds for new ones with longer maturities and reduced interest rates. The programme imposed losses estimated at GH¢7.3 billion on 22 banks in 2022, with the Bank of Ghana itself absorbing a 50% haircut on its holdings of domestic debt. The banking sector’s Capital Adequacy Ratio has since rebounded to 20.4% as of June 2026, well above the regulatory minimum.
Government Arrears Add to Credit Risk
S&P identified the government’s large arrears owed to suppliers and contractors as a key factor sustaining elevated NPLs. The Institute for Fiscal Studies has noted that arrears payments are critical because they provide liquidity to contractors, suppliers and the businesses that depend on them.
The issue has manifested in high-profile cases. In June 2026, the National Association of Institutional Suppliers picketed the Education Ministry over nearly GH¢50 million owed for educational materials supplied to public senior high schools since 2023, with some suppliers saying the unpaid debts had disrupted their businesses and made it difficult to continue operations.
Cedi Depreciation and Inflationary Pressures
Exchange-rate and inflationary pressures have also weighed on borrowers’ ability to repay. The cedi depreciated by 6.12% in the third quarter of 2026 and by approximately 9.5% in the first nine months of the year, trading at about GH¢11.55 to the US dollar in September, compared with GH¢10.45 at the end of December 2025.
Inflation, which slowed dramatically to 3.3% in February 2026 from over 50% at the end of 2022, has since edged higher. Annual inflation rose to 4.6% in March and 6.9% in April 2026, moving closer to the lower bound of the Bank of Ghana’s 6%–10% target band.
Mixed Picture on Inflation Outlook
S&P said the credibility and effectiveness of Ghana’s monetary policy are improving, noting that after years of sizable fiscal deficit financing, the government appears to have put an end to monetary financing of the deficit.
“Nevertheless, we do not expect the low inflation seen at the start of 2026 to last; average inflation is more likely to be at the upper end of the Bank of Ghana’s 6%-10% target, until 2029,” the agency concluded.
That assessment aligns with the Bank of Ghana’s own cautious stance. Governor Asiama has ruled out an immediate cut to the inflation target despite suggestions from some investors that Ghana could sustain a lower range of 4–6%. Deloitte has also projected that inflation will rise gradually towards the 6%±10% target band, with oil prices, utility tariffs and exchange-rate pressures posing upside risks.
The central bank has maintained the policy rate at 14.0% since March 2026, when it was cut by 150 basis points from 15.5%.
BoG’s 10% Target and Sector Improvements
The Bank of Ghana has directed all regulated financial institutions to reduce their NPL ratios to no more than 10% by the end of December 2026, with dividend and bonus restrictions applied immediately to institutions with NPLs above 15%.
Governor Asiama said the industry’s NPL ratio declined to 16.1% at the end of June 2026, from over 23% a year earlier, while the Capital Adequacy Ratio stood at 20.4%. “That is progress and not sufficiency, and 16.1 percent remains too high, even if it is fully provisioned,” he said.
The central bank has pointed to several positive trends. The stock of NPLs declined to GH¢19.9 billion at the end of June 2026 from GH¢20.7 billion a year earlier, while the NPL ratio adjusted for the fully provisioned loan loss category declined to 4.6% from 8.5%. Gross loans and advances increased by 39.4% year-on-year to GH¢124.3 billion, compared with growth of just 5.5% in June 2025, driven primarily by a 39.6% expansion in credit to private enterprises and households.
Banks also wrote off GH¢1.23 billion in bad debt in the first half of 2026, a 38% increase from the GH¢893 million recorded in the same period of 2025. The sector recorded a profit-after-tax of GH¢7.1 billion at end-June 2026, marginally lower than the GH¢7.2 billion recorded a year earlier.
The improvement was recorded across most sectors except agriculture, forestry and fishing, where the NPL ratio increased to 65.1% in June 2026 from 59.1% a year earlier.
Private sector borrowers continued to account for the overwhelming majority of NPLs, with their share increasing to 98% in June 2026 from 96.4% a year earlier, while the public sector’s contribution declined to 2% from 3.6%.
Fitch More Optimistic
S&P’s assessment contrasts with a more optimistic view from Fitch Ratings, which has said banks’ credit profiles are improving on a stronger operating environment. Fitch noted that the banking sector’s total capital adequacy ratio of 20.4% at the end of June 2026 was double the 10% minimum requirement, and said it expects the NPL ratio to reduce further as banks write off loans to meet the 10% prudential limit effective from end-2026.
S&P Affirms Ghana’s B-/B Rating
The banking sector assessment forms part of S&P’s broader rating review of Ghana. The agency affirmed Ghana’s long- and short-term foreign and local currency sovereign credit ratings at ‘B-/B’ with a stable outlook in September 2026, but warned it could downgrade Ghana’s ratings over the next 12 to 18 months if the government’s ability to refinance maturing debt comes under pressure.
S&P said weak institutional arrangements and high debt servicing costs continue to constrain Ghana’s ratings, though it acknowledged that institutional arrangements are improving. The November 2025 upgrade from CCC+/C to B-/B had marked a significant turning point in Ghana’s economic recovery, supported by the IMF programme, fiscal consolidation, and debt restructuring.
What Happens Next
With the Bank of Ghana’s end-2026 deadline for banks to cut NPLs to 10% fast approaching, the coming months will test whether the sector’s improving asset quality can be sustained amid a volatile exchange rate, elevated government arrears, and rising international oil prices.
The International Monetary Fund has also flagged gold price risks to Ghana’s banks, noting that the commodity’s volatility could affect the quality of gold-backed loans. The central bank is working with the Ghana Association of Bankers, the Chartered Institute of Restructuring and Insolvency Practitioners, and other stakeholders to develop a framework for business rescue financing under the Corporate Insolvency and Restructuring Act.
Whether S&P’s more cautious assessment proves correct—or whether the Bank of Ghana’s push to achieve the 10% target materialises—will determine how quickly the banking sector can shift from recovery to sustained lending and growth.
