Commercial banks have begun exploring more lending options for businesses and diversifying their investments into high-yielding asset classes in response to declining Treasury Bill (T-bill) rates.
Lending to enterprises has been gradual, with banks seeking prudent returns on their funds amid a significant drop in T-bill rates. Since the beginning of the year, the rate has fallen by more than 20%, reaching approximately 15% in March.
The President of the Ghana Association of Banks and Chief Executive of Stanbic Bank Ghana, Kwamina Asomaning, disclosed this on PM Express Business Edition on March 20, 2025, with host George Wiafe. He noted that banks are adjusting their strategies to align with current market developments.
Treasury Bill Rate Reduction and Market Impact
Mr. Asomaning explained that the sharp decline in inflation has placed sudden pressure on the cedi.
“This is because the return investors are getting now is not commensurate with the expected inflation rate,” he said.
He warned that this development could influence the demand for foreign exchange, potentially increasing pressure on the cedi in the coming weeks.
Treasury Bill Rate Reduction Debate
Mr. Asomaning advised that the pace of T-bill rate reductions must be managed carefully to prevent market shocks and ensure alignment with macroeconomic indicators such as inflation and the Monetary Policy Rate.
He also urged investors to focus on projected inflation trends rather than historical data when making decisions.
“The Finance Minister, Dr. Ato Forson, in the 2025 Budget, projected that inflation will hit 11% by the end of the year. That should indicate the government’s commitment to reducing inflation further,” he stated.
High Interest Rate Dynamics and Non-Performing Loans
Addressing concerns over high interest rates, Mr. Asomaning dismissed claims that commercial banks benefit from such conditions.
“We are not happy when interest rates are high because they affect businesses’ ability to repay loans on time. That is why some banks reduce lending,” he noted.
On non-performing loans (NPLs), he described the situation as concerning.
“We have taken measures to address the issue, with support from the Bank of Ghana,” he assured.
Data from the Ghana Association of Banks as of December 2024 put the NPL ratio at approximately 21.8%. This has affected banks’ lending capacity, as many institutions focus on strengthening their financial positions.
“We should not overlook the impact of the external environment on businesses’ ability to repay loans,” Mr. Asomaning added.