The non-performing loans (NPLs) ratio, a measure of loans facing various risks of default has moved up by 36.17 percent. This means that out of the loans and advances that were disbursed to businesses and individuals some GH¢6.4 billion were defaulted
This represents an increase from 4.7 to 6.4 billion cedis within the twelve months’ period.
A nonperforming loan (NPL) is the sum of borrowed money upon which the debtor has not made his scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in default.
Commerce and finance accounted for the highest non-performing loans of banks.
The banking sector says, high NPLs continue to strike to pose to the industry.
Investors have however blamed erratic power supply as a reason why the are unable to fulfil their debt obligations.
This also led to a higher NPL ratio of 17.7 per cent in February 2017, compared with 15.6 per cent in the same period last year.
However, in January 2017 the NPL ratio was 18 per cent.
Contributors to the high non-performing loans included Commerce & Finance with 39.7%.
This is followed by services and the Electricity, Gas & Water sectors with 13.6 and 10.1% respectively.
The three sectors represented 63.4 per cent of the total NPLs of the banking sector.
Meanwhile the industry’s NPL ratio is expected to improve following the conclusion of restructuring arrangements for the industry’s exposure to the Bulk Oil Distribution Companies (BDCs).
Also, as government continues to pay down the energy-related State-Owned enterprises (SOEs) debts according to the agreed quarterly schedule, banks’ exposure to the energy sector will decline.
This, together with additional efforts by banks to tighten credit risk management practices and intensify loan recovery efforts, particularly for large non-oil related exposures, could lead to further reduction in the NPL ratio.