Banks in Ghana wrote off GH¢3.19 billion as bad debt in October 2023, marking a 9.5% year-on-year increase, as revealed by the Domestic Banks Income Statement published by the Bank of Ghana (BoG).

This figure is higher than the ¢2.92 billion recorded during the same period in 2022. The provisions were made in the form of loan losses, depreciation, and other related categories.

According to the Bank of Ghana (BoG), asset quality risks rose in October 2023, indicating an increase in the Non-Performing Loans (NPL) stock and NPL ratio during that period. The industry's NPL ratio grew to 18.3% in October 2023 from 14.0% in October 2022, attributed to a higher growth in the NPL stock and a contraction in gross loans.

Similarly, the NPL ratio adjusted for the fully provisioned loan loss category increased from 3.9% to 6.4% during the same comparative period. The NPL stock saw an 18.8% increase to ¢13.5 billion in October 2023 from ¢11.3 billion in October 2022, reflecting a deterioration in domestic currency loans.

The private sector accounted for the majority of nonperforming loans, making up 93.8% in October 2023. The overall rise in the industry NPL ratio was influenced by deteriorating NPL ratios in five economic sectors, while three sectors reported improvements during the review period.