Accra: The stock of non-performing loans (NPLs) in Ghana's banking sector declined to GHS19.9 billion at the end of June 2026, down from GHS20.7 billion during the corresponding period a year earlier, marking an improvement in asset quality across the industry.
According to Ghana Web, new data from the Bank of Ghana (BoG) indicate a significant decrease in the industry's NPL ratio, which fell to 16.1 percent in June 2026 from 23.1 percent in June 2025. This ratio, when adjusted for the fully provisioned loan-loss category, also decreased to 4.6 percent from 8.5 percent over the same period. The data suggests that the banking industry's asset quality is strengthening, although the agriculture, forestry, and fishing sector continues to present a considerable credit risk.
Private sector borrowers accounted for the majority of non-performing loans, with their share increasing to 98 percent in June 2026 from 96.4 percent a year earlier. Meanwhile, the public sector's contribution to total NPLs decreased to 2 percent from 3.6 percent. "The distribution of NPLs remains broadly consistent with the sectoral composition of industry credit exposures," the Bank of Ghana commented.
The central bank reported that asset quality improved across most sectors during the review period, with the exception of the agriculture, forestry, and fishing sector, where the NPL ratio increased to 65.1 percent in June 2026 from 59.1 percent a year earlier. Despite this, improvements in other sectors offset the deterioration, resulting in an overall enhancement in the banking industry's asset quality.
The Bank of Ghana attributed the improvement in the credit portfolio to enhanced loan recovery efforts and improved credit risk management practices. This development indicates improving credit conditions, though vulnerabilities in asset quality remain a concern. A sustained reduction in NPLs could potentially increase banks' capacity and willingness to extend credit to businesses and households, and possibly support a gradual reduction in the cost of borrowing.
Credit growth has also accelerated, as evidenced by a significant increase in bank credit growth. Gross loans and advances rose by 39.4 percent year-on-year to GHS124.3 billion at the end of June 2026, compared with a growth rate of just 5.5 percent in June 2025. This expansion was primarily driven by stronger lending to the private sector, with credit to private enterprises and households increasing by 39.6 percent to GHS119.1 billion, compared to a 9.2 percent growth a year earlier.
Credit to the public sector also showed signs of recovery, growing by 5.6 percent to GHS4.7 billion after a contraction of 31.3 percent in the same period in 2025. Consequently, the private sector's share of total bank credit increased to 96.2 percent from 95.1 percent, while the public sector's share declined to 3.8 percent from 4.9 percent.
Despite the strong growth in lending, bank credit remained concentrated in a few sectors, with the services sector accounting for the largest share of total industry credit at 36.6 percent, followed by commerce and finance at 24.1 percent, and construction at 10.7 percent. Combined, these three sectors absorbed 71.4 percent of total industry lending, slightly below the 72.3 percent recorded a year earlier, indicating a modest diversification in the allocation of bank credit.
The Bank of Ghana stated that financial soundness indicators remained broadly positive at the end of June 2026, supported by improvements in solvency, core liquidity, and asset quality. "Efficiency and profitability indicators, however, showed mixed trends during the review period," the report added.