Bank of Ghana orders banks to cut NPL ratios below 10% by end-2026

The Bank of Ghana (BoG) has directed regulated financial institutions to reduce their Non-Performing Loan (NPL) ratios to below 10% by December 2026, as part of measures to strengthen credit conditions and improve the resilience of the banking sector.

The BoG Governor, Dr. Johnson Pandit Asiama, said while banks have made progress in reducing bad loans, the current level remains a major concern and continues to limit the sector’s ability to expand credit to businesses and households.

Speaking at a forum on “Restructuring Distressed Companies: Non-Performing Loans (NPLs) and Post-Commencement Financing,” Dr. Asiama noted that the banking industry’s NPL ratio declined to 16.1% in June 2026, from 23.1% recorded in June 2025, cautioning that the improvement does not mean the challenge has been fully addressed.

“The industry’s non-performing loan ratio has declined to 16.1% as of the end of June this year, down from over 23% a year ago, while the capital adequacy ratio stood at 20.4%. Capital at that level gives banks the room to take considered risks. But while this represents progress, it is not sufficient.

“Our regulatory measures require every regulated institution to reduce its NPL ratio to no more than 10% by the end of December this year, supported by stronger credit appraisal, credible NPL reduction plans, effective recovery functions, and the write-off of fully provisioned exposures with no realistic prospect of recovery,” he said.

He explained that high levels of non-performing loans have wider economic implications because they tie up bank capital and restrict lending, particularly to smaller and higher-risk businesses.

“High non-performing loans tie up capital. They raise recovery costs and restrict new credits, most severely for smaller and higher-risk borrowers. Reducing them is therefore not merely a supervisory concern. It is part of Ghana’s development agenda,” he added.

Banks’ NPL ratio falls to 16.1%

Ghana’s banking sector recorded a notable improvement in asset quality in the first half of 2026, with the industry’s non-performing loan (NPL) ratio declining to 16.1% in June 2026 from 23.1% a year earlier.

The decline reflects stronger loan performance and improved asset quality across the sector, underscoring the progress made in strengthening banks’ balance sheets.

The improvement came alongside robust growth in the banking industry. Total assets expanded by 30.7% year-on-year to GH¢502.4 billion in June 2026, supported by growth in deposits, borrowings and shareholders’ funds.

The sector’s solvency also strengthened considerably, with the Capital Adequacy Ratio (CAR) rising to 20.4% from 10.6% in June 2025, providing banks with a stronger capital buffer to absorb potential shocks and support lending.