The Bank of Ghana has been praised for introducing proactive measures aimed at preventing a surge in non-performing loans (NPLs) as lower interest rates encourage banks to increase lending to businesses and households.
Head of Trading, Global Markets at Absa Bank Ghana Limited, Andrews Akoto, says the central bank’s strategy will help ensure that banks maintain sound lending practices even as borrowing becomes more affordable and credit demand rises.
Speaking during Channel One TV’s Quarterly Economic Outlook, Mr Akoto noted that the Bank of Ghana anticipated the risks associated with rapid credit expansion and introduced measures to safeguard the banking sector.
“With regard to credit quality, I think the Bank of Ghana has done a lot with that. They have been very proactive. Last year in August, they set a target for non-performing loan ratios,” he said.
According to him, the current decline in interest rates is expected to stimulate lending, particularly to small and medium-sized enterprises (SMEs), creating opportunities for businesses to expand and invest.
However, he cautioned that increased competition among banks to grow their loan portfolios could weaken credit assessment standards if not properly managed.
“Essentially, with the lower interest rates, this is very accommodative, and so there will be a lot of loan growth that the banks are postured for. You would see the banks out there actually trying to write more loans,” he explained.
Mr Akoto said the Bank of Ghana’s directives would ensure financial institutions focus on financing viable businesses rather than pursuing loan growth at the expense of asset quality.
“So for the banks, they now have a constraint. Even as they are expanding credit to the private sector, they are to finance the most viable ideas and make sure that they don’t run into a problem where they lend wily-nilly and when the credit cycle turns, they are in trouble again,” he added.
The comments come as borrowing costs continue to fall following the Bank of Ghana’s monetary easing cycle, a development widely expected to boost private sector investment and economic activity.
Recent data from the central bank show that the banking industry’s non-performing loan ratio rose slightly to 18.7 per cent in February 2026 from 17.9 per cent in January, although it remains below the 18.9 per cent recorded at the end of 2025.
Meanwhile, average lending rates declined significantly to 16.33 per cent in April 2026 from 20.58 per cent in January, making credit more affordable for businesses and individuals.
The Bank of Ghana is targeting a further reduction in the industry’s non-performing loan ratio to 10 per cent by the end of 2026 as part of efforts to strengthen financial sector stability, improve asset quality and sustain confidence in the banking system.
