The Bank of Ghana’s Monetary Policy Report for July 2024 has revealed a significant growth in the banking sector’s total assets, which soared by 33.3% to GH¢323.2 billion as of June 2024, compared to 21.2% growth in June 2023. This impressive increase was driven by robust deposit growth and the depreciation of the Ghanaian cedi.
The report indicated that foreign assets experienced a 57.6% rise in June 2024, although slightly lower than the 74.5% growth in June 2023. Domestic assets also showed notable growth, climbing by 31% in June 2024, up from the previous year’s 17.8%.
The share of foreign assets within the total asset base increased to 10.2%, up from 8.6% in June 2023, while the share of domestic assets declined to 89.8%, down from 91.4%.
In terms of investments, the banking sector recorded a 19.2% increase to GH¢107.2 billion by June 2024, reflecting significant growth in both short-term bills and long-term securities. This follows an 11% growth in June 2023. Short-term bills rose by 7.3%, a slowdown from the massive 149.6% increase seen last year, while long-term securities experienced a strong rebound, growing by 28.6% after a 23.2% contraction in 2023.
Despite this growth, the report highlighted that investments as a share of total assets reduced to 33.2% in June 2024, down from 37.1% in June 2023.
Gross loans and advances also witnessed a steady rise, growing by 15.6% to GH¢84.5 billion, compared to a 15.4% increase in the same period last year. Growth in net loans and advances, which adjusts for provisions and interest in suspense, moderated to 10.3%, down from 11.3% in June 2023.
Deposits, the primary source of funding for the banking sector, contributed 76.1% of total assets in June 2024, slightly down from 77.4% in June 2023. The sector’s total deposits increased by 31.1% to GH¢245.9 billion, despite a slower growth rate compared to the 42.8% rise recorded last year. Foreign currency deposits specifically grew by 29.8% to GH¢81.2 billion, compared to 62.5% growth in 2023, reflecting the impact of cedi depreciation.
Borrowings rebounded significantly, growing by 44.4% to GH¢23.2 billion by June 2024, after experiencing a contraction of 39.1% in the previous year. Short-term domestic borrowings surged by 83%, while long-term domestic borrowing contracted by 17.6%. Short-term foreign borrowings also rebounded, growing by 33.2%, though long-term foreign borrowing shrank by 2.5%.
The report further noted a strong recovery in the banking sector’s shareholders’ funds, which grew by 44.9% to GH¢32.3 billion by June 2024, marking a sharp turnaround from the 15.1% contraction witnessed in the same period last year. This recovery was driven by a rebound in profitability across the industry.
