The growth rate of private sector credit (PSC) in Ghana has declined due to various factors, such as a tight monetary policy stance, banks’ portfolio rebalancing and a moderation in economic activity, according to data from the Bank of Ghana (BoG).
PSC, in nominal terms, amounted to GH¢64.9 billion at the end of April this year – an increase of 19.74 percent over the GH¢54.2 billion recorded at the same time in 2022. However, this was lower than the 26.5 percent increase recorded during same period of the previous year.
The data shows that, in nominal terms, PSC was GH¢72.9 billion, GH¢73.7 billion and GH¢63.8 billion in October, November and December of 2022. In the first quarter of this year, it was GH¢67.6 billion in January, GH¢65.5 billion in February and GH¢65.7 billion in March.
Investments in bills, securities and equity remained the largest component of total assets as at end-June 2021, accounting for 46.5 percent of total assets. This reflects a 28.8 percent year-on-year growth in investments in June 2021, compared to the slow growth in credits.
The higher investments growth was due to banks’ portfolio reallocation in favour of these less risky assets due to the elevated credit risks and somewhat sluggish credit demand due to the pandemic.
Gross loans and advances grew by 5.7 percent year-on-year to GH¢47.5 billion as at end-June 2021, compared to 16.3 percent growth in the previous year. Net loans and advances also grew by 5.5 percent year-on-year to GH¢41.1 billion compared with 14.7 percent growth in June 2020.