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Ghana News

Expert allays fears over Ghanaian banks’ losses in 2022

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Ghanaian banks that experienced losses in 2022 have put measures in place to prevent such occurrences from happening again, according to Godfred Bokpin, a Professor at the University of Ghana Business School. Major banks such as GCB Bank and Standard Chartered Bank Ghana recorded losses due to the country’s restructuring of its local currency and overseas debt, which amounted to about $1.4 billion.

GCB Bank posted a 593.4 million cedis ($50.5 million) net loss for the year to end-December, its first loss since 1993, while Standard Chartered Bank Ghana Ltd. reported a loss of 297.8 million cedis. Guaranty Trust Holding Co., Nigeria’s largest bank by market value, pledged to slow lending and bond trading in Ghana in response to the losses.

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Prof Bokpin said that the worst moment is over, and that the first quarter results for some banks show a strong balance sheet from foreign banks such as Stanbic. These foreign banks have also assured their customers that they will recapitalize their banks.

However, domestic banks such as GCB and others that have been heavily impacted have a low capital adequacy ratio, and they will need to recapitalize in consultation with the central bank. Prof Bokpin believes that most banks will be adequately capitalized after the capital planning process, but the issue at the moment is whether banks are robust enough to support growth and employment generation, as some have indicated that they will cut back on their lending.

For the most part, the measures that the banks have put in place to prevent further losses are reassuring. It is important that banks work to ensure that their capital adequacy ratios are strong, and that they are adequately recapitalized in consultation with the central bank. However, the issue of banks cutting back on their lending is a concern, as it could negatively impact growth and employment. It remains to be seen how these banks will navigate these challenges and continue to support the growth of Ghana’s economy.

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