Despite the adverse macroeconomic developments, and the negative effect of the Domestic Debt Exchange Programme, liquidity in the banks remained satisfactory.
According to the 2023 Annual Report and Financial Statement of the Bank of Ghana, liquid assets to total deposits increased to 86.3% at end-December 2023, from 85.4% in 2022.
Liquid assets to volatile funds also increased to 135.3% in 2023, from 133.8% in 2022.
However, the banking industry’s solvency position, measured by the Capital Adequacy Ratio (CAR), declined to 13.9% in 2023, from 16.2% in 2022, but was higher than the prudential minimum of 10%.
The decline in the CAR was attributed to losses due to the DDEP and an expansion in the risk-weighted assets of banks.
Similarly, the banking industry’s NPL ratio increased to 20.6% at end-December 2023, from 16.6%ent at end-December 2022.
The increase in the ratio was due to the increase in the NPL stock, due to the challenging macroeconomic conditions.
Overall, the Bank of Ghana said in 2023, banks remained stable and profitable despite the challenging macroeconomic environment and the spill-over effects from the DDEP.
The FSIs broadly remained healthy, supported by the raft of regulatory measures introduced to mitigate the impact of the DDEP.