Banks operating in Ghana wrote off GHS 883.7 million as bad debt during the first four months of 2026. This figure represents a substantial 35.1% increase compared to the GHS 654.2 million recorded in the corresponding period of April 2025. The data comes from the Domestic Money Banks Income Statement.
This significant rise in write-offs indicates that banks are actively removing uncollectable loans from their balance sheets. A loan write-off is an accounting action where a lender removes a defaulted loan, often 180 or more days past due, from their active records. This process helps to clean up financial statements and provide a clearer picture of asset quality.
The increase in bad debt write-offs occurs within a broader context of evolving asset quality risks in Ghana's banking sector. While write-offs surged, the industry's Non-Performing Loans (NPL) ratio showed some improvement. The NPL ratio declined to 18.0% in April 2026 from 23.6% a year earlier. This ratio measures the proportion of loans that are in default or close to being in default.
The Bank of Ghana, the country's central bank, reported that the total provision for bad debt included loan losses, depreciation, and other items. The NPL stock, which is the total value of non-performing loans, also decreased to GHS 20.7 billion in April 2026 from GHS 21.7 billion in April 2025. This suggests that while new write-offs are high, the overall pool of problematic loans is shrinking.
The private sector remains the primary contributor to non-performing loans. Its proportion of NPLs increased to 98.2% in April 2026, up from 96.5% in April 2025. Conversely, the public sector's share of NPLs declined to 1.8% from 3.5% over the same period. This trend highlights the ongoing credit risk associated with lending to private businesses and individuals.
The improvement in the overall NPL ratio was not uniform across all sectors. Asset quality improved in most areas, but the agriculture, forestry, and fishing sector saw its NPL ratio worsen. This sector's NPL ratio increased from 62.1% in April 2025 to 66.1% in April 2026. This indicates specific challenges within Ghana's agricultural economy that impact loan repayment capabilities.
The high volume of write-offs, despite an improving NPL ratio, suggests banks are taking proactive steps to manage their loan portfolios. This could involve more aggressive recovery efforts or a more realistic assessment of loan collectability. Financial institutions must balance managing existing bad debts with extending new credit to support economic growth.
Policymakers and regulators will closely monitor these trends. The Bank of Ghana's focus on asset quality is crucial for maintaining financial stability. Continued vigilance is necessary to ensure that banks remain resilient against potential economic shocks. The performance of the private sector, particularly in agriculture, will be a key indicator for future asset quality.
The banking sector's ability to navigate these challenges will influence lending rates and access to credit for businesses and individuals. This directly impacts Ghana's broader economic development. Investors and businesses will watch for further data on NPLs and write-offs to gauge the health of the financial system.