22% of Banks in Ghana Fall Short of 13% CAR Threshold – Report
22% of Banks in Ghana Fall Short of Capital Adequacy Requirements Amid Credit Risk Concerns
- A report by IC Insights has revealed that 22% of banks operating in Ghana have failed to meet the required 13.0% Capital Adequacy Ratio (CAR) threshold
- The report indicates that these banks, mostly indigenous, need to maintain ongoing adherence to their recapitalization plans
- The November 2024 Monetary Policy Report further emphasized the positive trend
A report by IC Insights has revealed that 22% of banks operating in Ghana have failed to meet the required 13.0% Capital Adequacy Ratio (CAR) threshold, signaling challenges within the sector.
The report indicates that these banks, mostly indigenous, need to maintain ongoing adherence to their recapitalization plans, enforce stringent credit risk standards, and focus on sustained profitability in order to restore their capital buffers to pre-Domestic Debt Exchange Programme (DDEP) levels.
Despite these setbacks, IC Insights noted that the banking sector is making significant progress toward capital restoration, especially as the industry heads into the final year of regulatory reliefs.
As of October 2024, the industry’s CAR, with regulatory reliefs, stood at 14.3%. Without the reliefs, however, it dropped to 11.1%, reflecting a steady improvement from the previous year’s CAR of 7.3%.
The November 2024 Monetary Policy Report further emphasized the positive trend, showing a rise in solvency indicators.
The CAR, with reliefs, had increased from 7.3% in October 2023 to 11.1% in October 2024.
However, the report also highlighted that credit risk remains a concern. The Non-Performing Loan (NPL) ratio climbed to 22.7% in the review period, up from 18.3% a year earlier, signaling ongoing challenges in managing credit risk within the sector.
