Exercise prudence in adjusting lending rates –Asiama tells banks

Dr. Johnson Pandit Asiama, Governor of the Bank of Ghana

Dr. Johnson Pandit Asiama, the Governor of the Bank of Ghana, has urged banks to be careful with lending rates. He emphasized the importance of clear communication with clients.

He stated that viable businesses should continue to receive support. Tailored solutions are needed for vulnerable sectors.

The Governor spoke at the first post-Monetary Policy Committee (MPC) meeting in Accra. This meeting included Chief Executive Officers from various banks. He noted that these discussions help align policy direction and efforts for economic stability.

The MPC raised the policy rate by 100 basis points to 28 percent. This decision aims to strengthen the disinflation process, which is currently slow.

Dr. Asiama mentioned ongoing improvements in financial stability. However, he acknowledged that challenges still require focused efforts.

He highlighted recent gains in macroeconomic stability after the Debt Exchange Program (DDEP). The profitability of banks has improved amid high liquidity and recapitalization efforts.

“Even without reliefs, the Banking Sector Soundness Indicator (BSSI) shows improvement,” he said. This improvement is due to better solvency and asset quality measures.

The banking sector experienced strong asset growth of 34.05 percent year-on-year as of February 2025. This growth was primarily funded by deposits, which increased by 27.89 percent.

The industry remains solvent with a Capital Adequacy Ratio of 14.35 percent. This is above the regulatory minimum of 10 percent, with most banks exceeding this threshold.

However, Dr. Asiama noted solvency concerns for some domestically controlled and state-owned banks. Recapitalization efforts for these banks remain unclear and addressing capital shortfalls is a priority.

“We are working closely with affected institutions,” he said, “to restore depositor confidence.” Ensuring compliance with regulatory requirements is also essential.

To tackle rising credit risks, he urged all banks to enhance their risk management frameworks. Improvements in underwriting and early warning systems are necessary.

The central bank expects better loan origination and monitoring practices soon. Dr. Asiama encouraged strategic partnerships and digital transformation within banking services.

Additionally, he mentioned that the Bank of Ghana will engage more with non-bank financial service providers to foster innovation while ensuring consumer protection and financial inclusion.

By Morkporkpor Anku
GNA