As a result, commercial banks also bear greater responsibility to their customers in earning interests on such deposits.

The latest banking sector report by the Bank of Ghana shows that deposits accounted for 62.5 percent of the banking industry’s assets as at December 2017.

According to the central bank’s data, total deposits went up by some 6.67 billion cedis between December 2016 and the same period last year.

For the twelve months period, total amounts deposited with all banks amounted to 58.28 billion cedis.

This is up from the 51.66 billion cedis recorded in December of the preceding year.

84.2 percent of all deposits came in as domestic currency while the remaining 15.8 percent came in foreign currency.

Borrowings by commercial banks also came in as the second source of funding for commercial banks accounting for about 16 billion cedis of the funding needs of the banks.

By this, commercial banks were able to raise money for their operations from short and long term instruments.

Although income from loans to customers dropped between December 2016 and the same period last year (46.4 percent in December 2017, from 50.7 percent in December 2016), it perhaps still leads as income generating source for banks.

A situation, the central bank attributed to the drop in lending rates as well as the rising Non Performing Loans.

Meanwhile, the share of income from investments (both short and long term) increased from 33.5 percent in December 2016 to 38.0 percent in 2017, justifying the shifts in banks’ portfolio preferences despite declining money market rates.

Also, the money that the banking industry made from fees and commissions such as ATM card use dropped from 10.6 to 10.2 percent between the twelve month period.

While ‘other’ income, recorded a marginal increase from 5.2 percent to 5.5 percent during the period under review.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Deposits still major source of funds for banks – BoG report appeared first on Citi 97.3 FM - Relevant Radio. Always.

According to the Bank of Ghana, the businesses constituted 80.6 percent of loan default attributable to the private sector for last year compared to the estimated 7.9 percent of loan default attributable to the private sector recorded by foreign businesses.

This is among the key findings of the Banking sector report for January this year.

The report catalogued operations in the banking industry as at December 2017.

Between December 2016 and the same period last year, the total loans that banks offered to their customers increased from 35.4 to 37.66 billion cedis.

The Bank of Ghana’s report also put the banking sector’s non-performing loans (NPLs) at 8.58 billion cedis as at the end of last year compared to the 6.14 billion cedis recorded in the preceding year.

Even though loan disbursements to both indigenous and foreign private sector businesses went up for the period, the local private businesses defaulted most in terms of repaying the loans.

Of the ninety-four percent loan default attributable to the private sector, indigenous private enterprises accounted for as much as 80.6 percent of total NPLs in December 2017 compared with a share of 78.9 percent in 2016.

Their foreign counterparts on the other hand, managed to bring their percentage of loan default down to 7.9 percent from 13.2 percent in the preceding year.

Meanwhile the public sector’s contribution to the industry’s NPLs increased from 3.2 percent in December 2016 to 5.7 percent in December 2017.

It is however not certain, what factors accounted for the inability of local businesses to repay for loans contracted from banks.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Local businesses worst loan defaulters in 2017 – BoG report appeared first on Citi 97.3 FM - Relevant Radio. Always.

Government is currently indebted to about 17 Bulk Distribution Companies in excess of 500 million dollars.

In government’s bid to clear debts owed BDC’s, Citi Business News understands a payment plan was agreed by the BDCSs, the Ghana Association of Bankers and the Finance Ministry in which payment of the debt will be made through a Special Purpose Vehicle (SPV) to be known as the legacy bond limited and shared fairly among the debt holding banks.

However new documents cited by Citi Business News reveal that the agreement may be ditched by government authorities.

Speaking to Citi Business News Senyo Horsi said he is confident government will go by the contract agreed by all parties.

“For me am confident the Ministry of finance would want to execute and respect the structure laid down and has agreed to for the debt to be paid within the period set. I have very limited reason to want to doubt their commitment to the structures and so I would encourage industry not to be afraid. I think this will be properly resolved.”

Though Senyo Horsi stated that he will be quite surprised if government decides not to to abide by the agreement reached with all parties he insisted that government was committed to ensure that the parties received what was due them.

‘I think that would bother on the ministry and its commitment that it made to the banking industry and us the BDC’s as well. But I don’t see that happening. You know when debts like this are being paid you hear all kinds of rumours but I trust the minister and his deputies and their work”, He stated.

Meanwhile documents sighted by Citi Business News reveal that the parties involved have begun raising concerns following moves by the Finance Ministry to rather pay the BDCs through their own private accounts and ditch the agreed plan.

Letters sighted by Citi Business News to authorities cautioned that any move by government not to go by the agreement will have dire consequences on the transparency and equitable allocation of funds to the banks and also derail the restructuring objectives and the significant efforts made so far by all parties involved.

Citi Business News has learnt the Finance Ministry is expected to disburse 400 million cedis this month [September] to clear a large chunk of the debt, but sources familiar with the development say the cash may not go through the SPV as agreed by stakeholders.

According to sources within the Ministry of Finance, Hon. Cassiel Ato Forson, the deputy minister in charge of the ministry has been given the charge to ensure the agreed process between the parties and government is carried through.

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By: Norvan Acquah – Hayford/citibusinessnews.com/Ghana

The post BDCs chamber calls for calm over debt payment uncertainty appeared first on Citi 97.3 FM - Relevant Radio. Always.