BANKS WRITE OFF GH¢1.39BN IN BAD LOANS AMID RISING PROVISIONS
Non-performing loan ratio drops as industry targets long-term asset quality
Banks in Ghana wrote off a total of GH¢1.39 billion in bad loans during the first ten months of 2025, reflecting a significant push to clean up balance sheets and manage credit risk across the industry.
The latest data from the Domestic Money Banks Income Statement shows that the figure represents a 56.7% increase in write-offs compared to the same period in 2024, far surpassing the 10% rise recorded in October of that year.
The sharp increase in write-offs was driven by higher provisions for impaired loans, depreciation, and related credit costs. Analysts say the trend points to a more aggressive stance by banks to address legacy credit challenges and support long-term stability, even at the cost of short-term profits.
“Banks are taking a more decisive view on impaired assets,” a senior industry source told The Ghanaian Times. “This shows a commitment to restoring capital strength and sustaining investor confidence.”
Despite the surge in write-offs, the sector has recorded notable gains in asset quality. The non-performing loan (NPL) ratio declined to 19.5% in October 2025, down from 22.7% in the same period last year. When adjusted for fully provisioned loans, the NPL ratio dropped further to 6.8%, from 9.4% in October 2024.
The improvement was largely attributed to a reduction in sub-standard loans and a reclassification of more defaulted accounts as “loss”, which were subsequently written off.
In absolute terms, the stock of NPLs fell by 6.2% to GH¢20.1bn, from GH¢21.4bn in October 2024. The contraction was driven by loan repayments, write-offs, and the strengthening of the Ghana cedi, which lowered the value of foreign currency-denominated credit exposures.
An economist noted that the appreciation of the local currency had offered banks with foreign liabilities some relief. “The cedi’s gains have helped reduce the pressure on balance sheets, especially for banks exposed to foreign currency loans,” he said.
The banking industry’s clean-up efforts come amid subdued but improving credit conditions and form part of broader moves to restore financial sector resilience after years of stress linked to debt restructuring and macroeconomic volatility.
Source:NKONKONSA.com
