Bank of Ghana Governor Johnson Asiama has described Ghana’s banking sector as stable, profitable and well-capitalised, even as lending to households and businesses continues to grow at a slower pace.
Speaking at the opening of the 129th meeting of the Monetary Policy Committee (MPC), Dr Asiama said the strength of the banking sector remains vital for the effective transmission of monetary policy across the economy.
“The banking sector remains sound, it remains profitable, and it remains well capitalised. We have seen asset quality improving meaningfully over the past year,” he said.
Dr Asiama explained that improvements in the sector are important not only for maintaining financial stability but also for ensuring that adjustments in the central bank’s policy rate translate into real credit conditions for households and businesses.
“The extent to which changes in the policy rate translate into credit conditions for households and businesses is important,” he noted.
Despite the sector’s overall stability, the governor acknowledged that credit growth remains subdued. He said further analysis is needed to determine whether the slowdown is being driven by banks’ lending decisions or weaker demand for loans from the public.
“We need to evaluate whether the constraint is from the supply side — whether it’s still on the side of banks — or whether it’s from the demand side, which is on the side of the borrowing public,” he said.
Possible supply-side constraints, he explained, could include banks’ risk appetite, capital buffers and levels of non-performing loans.
Dr Asiama warned that while the sector’s resilience is encouraging, persistent weak credit growth could slow economic recovery and limit the impact of monetary policy.
“This committee was asked to exercise discipline in the face of improvement… but today the judgment required is more complex. We must make our decision at the intersection of domestic success and external uncertainty,” he added.
Members of the Monetary Policy Committee are expected to weigh these developments carefully as they deliberate on the appropriate policy rate, balancing improving domestic indicators with ongoing global economic risks.