The Chief Executive Officer of the Ghana Bankers Association, John Awuah says a growth in impairment is a challenge to the banking industry.
The CEO was referring to the effects of non-performing loans to the banking sector especially now, during the Covid-19 pandemic.
According to him, a recent growth impairment figures to 16.4% from 15.3% is a significant risk to the banking sector.
Speaking on JoyNews’ PM Express, John Awuah explained that with several bank-supported industries barely recovering from the pandemic it means “the cash flow projections have not been at the levels we anticipated when assets were restructured.”
“It means where banks are posting some good profit you’ll see that the impairment number in 2021 were not that impressive. Yes, in quarter 3 it came down to around 16.4 thereabout, but we’re talking about last year or 2020 when we were talking about 15.3 or something in that region.
“So any growth in impairment is a challenge to the industry and it means that the risk to the banking sector in terms of asset quality is real,” he said.
He further explained that with an increase in impairment numbers to 16.4%, in real terms “It means for every 100 Ghana cedis that the bank gives out as loan there is that possibility or probability that they will not be able to recover about 17 ghana cedis of it which is significant.
“When you give your deposit to the bank, you want your deposit plus whatever interest that could have accrued, so if banks are going to lend your deposit and have that likelihood of their inability to recover 16 and half percent of a 100 ghana cedis, it is significant and that is why the impairment risk [is still high].”
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