Ghanaian banks wrote off GHS 1.23 billion in loan losses and depreciation during the first half of 2026. This significant figure underscores continued pressure on the quality of bank assets. The amount represents a 38 percent increase compared to the GHS 893 million recorded in the same period of 2025.
This rise in loan-loss provisions points to persistent credit risks within the banking sector. It occurs even as key indicators of asset quality have shown improvement over the past year. The private sector remains the primary source of these bad loans, accounting for 98 percent of total non-performing loans (NPLs) in June 2026.
This trend fits into Ghana's broader economic narrative of managing credit risk amidst efforts to stabilize the financial system. The Bank of Ghana has consistently highlighted elevated asset quality risks. Despite these concerns, the industry's non-performing loan ratio fell sharply to 16.1 percent in June 2026, down from 23.1 percent a year earlier. This improvement suggests some success in managing bad loans, but the absolute value of impaired credit remains substantial.
The Bank of Ghana, in its July 2026 Monetary Policy Report, confirmed that asset quality risks remained elevated. However, the central bank also noted improvements in several key indicators. The adjusted NPL ratio, which excludes fully provisioned loss category loans, also improved significantly. It declined to 4.6 percent from 8.5 percent over the same period.
The stock of non-performing loans also saw a marginal decrease. It moved from GHS 20.7 billion in June 2025 to GHS 19.9 billion in June 2026. These figures suggest that banks have made progress in managing bad loans. However, the level of impaired credit remains substantial, requiring continued vigilance.
The data further reveals that private-sector borrowers dominate the non-performing loan landscape. Their share increased from 96.4 percent a year earlier to 98 percent in June 2026. Conversely, the public sector's share declined from 3.6 percent to 2 percent during the same period. This distribution broadly reflects the structure of banks’ credit portfolios, where private-sector lending forms the dominant share.
This development highlights ongoing credit challenges for businesses and households. Many struggle to service loans amid changing economic conditions. The decline in the NPL ratio is a positive development for the banking sector. It indicates an improved ability of borrowers to service their obligations. It also shows better management of credit risk by banks.
However, the increase in loan-loss provisions suggests banks are still taking significant steps. They aim to cushion their balance sheets against potential future losses. This combination of an improving NPL ratio and higher provisions presents a mixed picture of the industry's health. Fewer loans are classified as non-performing relative to total loan portfolios. Yet, the absolute level of bad loans remains high and demands substantial provisions.
The banking sector's immediate challenge is to consolidate improvements in asset quality. Simultaneously, it must ensure that credit continues to flow to productive sectors of the economy. For borrowers, especially businesses, these figures emphasize the need for stronger financial management. Sustainable borrowing practices are crucial as banks maintain caution regarding credit risk.
With almost GHS 20 billion in non-performing loans still on banks’ books as of June 2026, asset quality will remain a key issue. Both the Bank of Ghana and financial institutions will closely monitor this situation in the coming months. This ongoing focus is essential for maintaining financial stability and fostering economic growth.