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Commercial banks operating in Ghana wrote off a total of GH¢654.2 million as bad debt between January and April 2025, according to the Bank of Ghana’s latest Domestic Money Bank Report.

This marks a significant decline compared to previous years, with GH¢863.4 million written off during the same period in 2024 and GH¢1.087 billion in 2022.

The reported write-offs were primarily linked to loan defaults, asset depreciation, and other financial losses.

Despite the reduction, the central bank noted that credit risk in the banking sector remains relatively high.

However, the industry is showing signs of recovery, as evidenced by a drop in the non-performing loan (NPL) ratio over the one-year period ending April 2025.

During the review period, the banking sector’s asset quality improved, with the NPL ratio decreasing from 25.7% in April 2024 to 23.6% in April 2025.

After adjusting for fully provisioned loan losses, the ratio fell further to 9.0%. This improvement was driven by faster growth in total loans compared to NPLs.

Although the NPL stock rose by 8.7% to GH¢21.7 billion, the private sector remained the main contributor, accounting for 93.4% of NPLs in April 2025, up from 91.0% the previous year, while the public sector’s share declined.

The report suggests that while the sector is gradually improving in terms of loan performance, caution is still needed as bad debts remain a significant challenge for financial institutions.

DR/MA

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