Ghana's banking sector reported significant improvements in liquidity during 2025, with liquid assets to total deposits increasing to 96.3% by the end of December. This marks a notable rise from 92.5% recorded in December 2024. The Bank of Ghana (BoG) confirmed this positive trend, citing increased cash holdings and short-term investments as key drivers.
This improved liquidity positions the sector more strongly to meet short-term obligations and buffer against financial shocks. Furthermore, liquid assets to volatile funds also saw a substantial increase, climbing to 151.8% from 139.5% over the same period. This indicates a stronger buffer against sudden outflows of funds, reflecting enhanced stability.
The strengthening of the banking sector's financial health is a critical development for Ghana's broader economic stability. The Capital Adequacy Ratio (CAR), a measure of a bank's financial strength, rose to 17.5% at the end of December 2025. This is well above the 13% minimum prudential requirement set by the BoG and an improvement from 14.0% in December 2024. This trend aligns with Ghana's efforts to foster a resilient financial system, a crucial component for attracting investment and supporting economic growth, which saw a robust 6.0% expansion in 2025.
The BoG directly attributed the enhanced CAR to strategic capital injections by banks and higher reported profits across the industry. Although the Non-Performing Loan (NPL) ratio declined to 18.9% in December 2025 from 21.8% in December 2024, the central bank expressed concern. Despite this improvement, the BoG highlighted that credit risk remains elevated, indicating ongoing challenges in managing loan defaults.
The reduction in the NPL ratio, which measures the proportion of loans that are not being repaid, was influenced by growth in the total loan book, write-offs of irrecoverable loans, and a slower accumulation of new bad loans. However, the persistence of a high overall credit risk means decision-makers, including the central bank and financial institutions, must remain vigilant. Markets will closely monitor how banks manage their lending portfolios and whether this elevated risk translates into future financial instability, potentially impacting interest rates and economic growth prospects. Continued vigilance on asset quality will be crucial for sustaining the sector's positive trajectory.