The Second Deputy Governor of the Bank of Ghana, Elsie Addo Awadzi, has given a firm assurance that the banking sector is safe, sound and has the required absorbers to withstand the expected shocks associated with the second Covid-19 wave.

Giving this assurance at the Virtual UPSA Quarterly Banking Roundtable, Madam Addo Awadzi said the reforms undertaken so far have brought stability in the banking industry, adding, “we are confident about the sector’s resilience to withstand this challenge.”

Answering a question on the extent of liquidity in the banking sector following initiatives implemented by the Central Bank, the Second Deputy Governor expressed the view that the sector could not have been more resilient now, especially compared to the pre-reform era.

She explained that the Bank of Ghana has been transparent with the post-reforms, saying, the sector has been proven to be resilient even in the face of the Covid-19 pandemic.

Quality of Banking Assets and Non-Performing Loans

Regrading the level of toxic assets in the banking sector, the Second Deputy Governor was of the view that the quality of banks assets has improved considerably compared to the pre-clean-up era.

“The non-performing loan ratio of banks has trended downwards over the last two and half years and there has been a consistent improvement in the asset quality of banks, although there are still some non-performing assets,” she said.

The Second Deputy Governor further explained that: “this is due to the BoG’s new emphasis on stronger corporate governance within the banking sector.”

She also added that “key management personnel that are approved by the BoG do a better job at risk management, hence leading to an improvement in asset quality”

Sharing his thoughts on the sector’s resilience, President of the Ghana Association of Restructuring and Insolvency Advisors, Felix Addo, said the BoG took some immediate steps in the advent of Covid-19 which made banking systems even stronger.

For example, the Central Bank stopped payment of dividend as well as reduced the capital adequacy buffer from 13% to 11.5% percent. These helped to withstand the stress Covid-19 posed on the banking industry.

She pointed out that the BoG conducts monthly stress tests on the banking industry.

As of November 2020, the banks were considered to be resilient under all stress tests conducted, even in the face of the pandemic.”

In his opening remarks, Dr. Kofi Abotsi, Dean of the UPSA Law School stressed on the delight of the school to hold discussions in the most relevant topics in the banking industry, which will eventually lead to policy changes and reforms in the sector.

The aim of the event was to holistically analyse Ghana’s banking sector and dissect the challenges facing the sector.