Banks in Ghana recorded bad debt worth $220 million in 2018

This follows a report the Bank of Ghana (BoG) revealed through the Banking Sector Report.

The bad debt came from the first 10 months in 2018.

According to the report, the provision for bad debt was made up from loan losses, depreciation, among others.

It further said the banking industry’s adjusted non-performing loans (NPLs) ratio. The NPLs adjusted for fully-provisioned loss-loans category increased to 11.4 per cent from January to October 2018 from 10.5 per cent within the same period in 2017.

This reflected the decline in the loss loan category as a result of the write-offs by banks that were given approval by the Bank of Ghana.

The Bank of Ghana in June 2018 issued a directive to all banks to submit a schedule of loss loans that were past due for more than two years to activate the write-off policy. This was an initiative to reduce the size of the loss loan component of the industry’s NPLs.

This directive was in line with Section 75(2) and 92(2) ii of the Banks and Specialized Deposits-taking Institutions Act, 2016 (Act 930).

Meanwhile, the central bank gave approval to some banks to write-off their loss loans totalling a maximum of GH¢1.2 billion by August 2018.

The banks that received approvals to write-off their loss loans were required to submit quarterly reports on recoveries made on the loans that have been written off to Bank of Ghana to ensure full loan recovery.