The Monetary Policy Report for July from the Bank of Ghana highlights a significant increase in the banking sector's Non-Performing Loans (NPL) ratio, which rose to 24.2% in June 2024, up from 18.7% in June 2023.

Even when considering only fully provisioned loans, the NPL ratio rose to 10.8% in June 2024 from 7.8%, indicating a broader issue with non-performing loans across various categories.

This uptick in the NPL ratio is attributed to a faster increase in the NPL stock compared to the overall loan growth. Specifically, the NPL stock surged by 49.4% to GH¢20.4 billion in June 2024, compared to GH¢13.7 billion the previous year, reflecting declines in both domestic and foreign currency loans.

The private sector remains the largest contributor to the NPLs, holding a slightly increased share of 95.6% in June 2024, up from 95.5% a year prior. Conversely, the public sector’s share fell to 4.4% from 4.5%.

The agriculture, forestry, and fishing sector experienced the highest NPL ratio at 56.4%, up from 30.0% a year ago. This was followed by the transportation, storage, and communication sector, which saw its NPL ratio rise to 49.1% from 22.1%.

The construction sector's NPL ratio increased to 36.8% from 32.8%, while the electricity, water, and gas sector's ratio grew to 20.6% from 7.8%. The commerce and finance sector's NPL ratio remained stable at 20.2%.

The mining and quarrying sector had the lowest NPL ratio at 13.7% in June 2024, up slightly from 12.7% the previous year.