Dr. Ernest Addison, Governor of the Bank of Ghana, voiced confidence in the banking sector's ability to quickly restore capital buffers with help from a capital infusion from shareholders, despite a considerable increase in industry earnings during the first half of 2023.

This expansion is anticipated to boost the real estate sector's economic activity and increase the banking sector's overall resilience.

In an interview with the media in Accra after the Monetary Policy Committee (MPC) meeting in July 2023, Dr. Addison emphasized the significant increase in profits during the first half of 2023, which followed the previous year's sizable losses brought on by the domestic debt exchange programme (DDEP).

“If this trend persists we expect banks to rapidly rebuild capital reserves, with additional support from equity capital injections by shareholders,” he remarked,

To strengthen the stability of the banking industry, Dr. Addison highlighted the importance of activating the Financial Stability Fund, aimed at providing crucial recapitalization assistance to eligible banks.

In the first half of 2023, the banking sector experienced significant growth in profitability. Net interest income saw a remarkable surge of 41.4 percent, reaching GH¢9.9 billion, surpassing the 12.4 percent increase recorded during the same period the previous year.

Furthermore, net fees and commissions also witnessed substantial growth, rising by 30.6 percent to GH¢2.2 billion, compared to a 27 percent growth in the preceding year. This robust performance in operating income resulted in a sharp 46.1 percent increase, outperforming the 22.6 percent growth observed in 2022.

However, despite the strong rebound in profitability following losses incurred at the end of 2022 due to impairments of holdings in Treasury bonds, Dr. Addison noted that data provided by banks for the first half of 2023 indicated that lingering effects of the DDEP (Depository and Deposit Protection) persisted.

As of June 2023, the total assets of the banking industry reached GH¢242.4 billion, showing a moderated growth rate of 21.2 percent compared to 22.8 percent in June 2022. On a positive note, total deposits experienced significant growth, reaching GH¢187.6 billion in June 2023, representing a 42.8 percent increase from GH¢131.3 billion recorded in the same period in 2022. In contrast, total borrowings contracted by 39.1 percent to GH¢16 billion, down from GH¢26.4 billion a year earlier.

Dr. Addison disclosed that the banking industry's investments witnessed a sharp increase, driven by significant deposit growth. Total investments rose to GH¢89.9 billion in June 2023, compared to GH¢81 billion in June 2022.

This growth was primarily propelled by a 149.6 percent increase in short-term investments to GH¢39.9 billion, while medium-to-long-term investments declined to GH¢50.1 billion due to portfolio rebalancing following the DDEP.

Despite the industry's increased cost of operations, with operating expenses rising by 44.9 percent during the first half of 2023 compared to 22.9 percent growth in the same period of 2022, the overall effect resulted in a 51.2 percent increase in profit-before-tax in June 2023, far exceeding the 20.8 percent growth seen in June 2022.

The industry's profit-after-tax stood at GH¢4.3 billion, reflecting a substantial 51.4 percent increase from GH¢2.8 billion in 2021. As a result, the banking sector saw a higher return-on-equity of 37.6 percent in June 2023, up from 21.9 percent in June 2022, as well as a higher return-on-assets of 5.5 percent compared to 4.6 percent in June 2022.