Banks operating in Ghana wrote off GH¢1.23 billion in bad debt during the first half of 2026, according to data from the Domestic Money Banks’ Income Statement.
The figure represents a 38% year-on-year increase compared to GH¢893.0 million recorded in June 2025, with the provision classified as loan losses and depreciation .
Asset Quality Improves but Risks Persist
Despite the higher write-offs, the Bank of Ghana’s July 2026 Monetary Policy Report indicates that key asset quality indicators improved during the review period. The industry’s non-performing loan (NPL) ratio declined to 16.1% in June 2026 from 23.1% in June 2025 .
When adjusted for the fully provisioned loan loss category, the NPL ratio improved to 4.6% from 8.5% over the same period .
The stock of non-performing loans also decreased to GH¢19.9 billion in June 2026, compared with GH¢20.7 billion a year earlier. The Bank of Ghana noted that these developments point to an improvement in credit risk conditions, though asset quality vulnerabilities remain a concern .
Private Sector Dominates NPLs
The decomposition of NPLs continued to reflect the dominance of private sector credit in banks’ loan portfolios. The private sector accounted for the largest share of NPLs, with its contribution rising to 98.0% in June 2026 from 96.4% in June 2025 .
In contrast, the share of NPLs attributable to the public sector declined to 2.0% from 3.6% over the same period . The Bank of Ghana stated that the distribution of NPLs remains broadly consistent with the sectoral composition of industry credit exposures.
Profitability Under Pressure
The write-offs came amid a challenging profitability environment for banks. Profit-after-tax fell marginally to GH¢7.1 billion at end-June 2026, from GH¢7.2 billion a year earlier — a 1.3% contraction, reversing the 32.6% growth recorded in June 2025 .
Provisions for depreciation, bad debts, and impairment losses on financial assets surged by 38.2%, compared with a 14.8% contraction in June 2025. Return on Equity fell sharply to 22.9% from 32.2%, while Return on Assets declined to 4.4% from 5.6% .
The industry’s interest spread narrowed to 4.4% from 6.0%, while gross yields dropped to 6.1% from 8.9%, reflecting the low interest-rate environment that weighed on banks’ core income .
Regulatory Push for Further Reduction
The Bank of Ghana has directed regulated financial institutions to cut their non-performing loan ratios to no more than 10% by the end of December 2026, a move that could shrink the industry’s stock of impaired loans by an estimated GH¢7.6 billion and free up banks to extend more credit to businesses and households .
Governor Dr. Johnson Asiama stated that while the decline to 16.1% represents progress, it remains insufficient. “That is progress and not sufficiency, and 16.1% remains too high, even if it is fully provisioned. Our regulatory measures require each regulated institution to reduce its ratio to no more than 10% by the end of December this year,” he said .
The directive comes as total advances stood at GH¢124.3 billion in June 2026, up from GH¢89.7 billion in June 2025, representing annual growth of 38.6% .
Capital Positions Strengthen
Amid the asset quality challenges, the banking sector’s capital position has strengthened. Governor Asiama announced in August that all 23 banks operating in Ghana have met their capital requirements, describing the development as a sign of growing strength and resilience .
“The banking sector is also robust and resilient, with all banks now well capitalised. Capital and liquidity positions remain sound, while the improvement in asset quality provides a stronger balance sheet,” he said .
The Bank of Ghana’s macroprudential assessment at the end of June 2026 showed that systemic vulnerabilities within the banking industry remain broadly subdued, with macro-financial risks moderating amid improving macroeconomic conditions, declining sovereign risk perceptions, and strengthening investor confidence .
