BoG directs banks to reduce NPL ratio to 10% by Dec. 2026
The Bank of Ghana (BoG) has directed all banks in the country to reduce their non-performing loan (NPL) ratios to the prudential limit of 10 per cent by the end of December 2026, as part of efforts to strengthen asset quality and safeguard the stability of the banking sector.
Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, said the directive was aimed at ensuring that banks intensify measures to prevent, manage, recover and resolve problem loans, despite improvements in the country’s economic conditions.
Speaking at the Annual General Meeting of the Ghana Association of Banks, Dr Asiama disclosed that the banking sector’s NPL ratio had declined from 20.7 per cent in August 2025 to approximately 18.7 per cent as of August 2026.
Although the decline represents an improvement, the Governor stressed the need for banks to accelerate efforts to bring their NPL ratios within the regulatory threshold.
“Let me use this opportunity to remind all banks of the requirement to reduce their NPL ratios to the prudential limit of 10% by the end of December,” he stated.
Shift Towards Active Management of Bad Loans
Dr Asiama said the Bank of Ghana was placing greater emphasis on the active management and resolution of non-performing loans rather than allowing banks to rely primarily on provisions to absorb potential losses.
According to him, the regulator’s approach reflects a broader effort to address the underlying causes of bad loans and strengthen credit risk management across the industry.
“The increasing regulatory attention to NPLs therefore represents a shift from simply provisioning for problem loans to ensuring that banks actively prevent, manage, recover, and resolve problem loans,” he added.
The directive is expected to put pressure on banks to improve their credit assessment processes, strengthen loan recovery mechanisms and adopt more effective strategies to prevent borrowers from defaulting.
Banking Sector Assets Rise to GH¢500.2 Billion
The Governor also disclosed that total banking sector assets had increased by 20.4 per cent to GH¢500.2 billion as of August 2026, up from GH¢415 billion recorded a year earlier.
The growth reflects an expansion in the industry’s balance sheet amid improving economic conditions and a gradual recovery in the financial sector.
The sector’s capital adequacy ratio also improved from 18.3 per cent to 19.1 per cent, remaining comfortably above the regulatory minimum of 13 per cent.
Dr Asiama said all 23 banks operating in the country had met the regulatory capital requirements, indicating an improvement in the industry’s financial position.
However, he cautioned that restoring capital adequacy was only the beginning of the process of building a stronger banking sector.
He urged banks to maintain capital levels that adequately reflect their risk profiles and establish sufficient buffers to withstand potential economic and financial shocks.
Banks Urged to Strengthen Risk Management
Meanwhile, Chief Executive Officer of the Ghana Association of Banks, John Awuah, has called on financial institutions to strengthen their risk management systems as the industry moves from recovery towards transformation.
Mr Awuah said the banking sector had responded positively to recent economic difficulties, recording stronger balance sheets, improved capital positions, resilient profitability and continued growth in deposits and customer loans.
However, he warned banks against becoming complacent with the progress made, stressing that the industry’s next phase must focus on sustaining stability and building long-term resilience.
“The question before us, therefore, is no longer simply whether the banking industry has recovered from the difficulties of recent years. The more important question is, what do we do with the stability we obtain?” he said.
He noted that the changing economic environment required banks to reassess their business models, particularly as inflation and interest rates declined.
According to him, financial institutions must adapt their strategies to changing market conditions while ensuring that their operations remain sustainable and responsive to the needs of customers.
Fraud, Cybersecurity and AI Emerge as Key Concerns
Mr Awuah identified asset quality, fraud, cybersecurity threats, technological developments, financial technology companies and artificial intelligence (AI) as some of the emerging issues requiring greater attention from banks.
He stressed the need for financial institutions to strengthen their internal controls, invest in technology and improve their capacity to identify and manage emerging risks.
The growing role of fintech companies and AI in financial services also presents opportunities for innovation and efficiency, but requires banks to adopt appropriate safeguards to protect customers and maintain confidence in the financial system.
Call for a Resilient and Future-Ready Banking Sector
Mr Awuah challenged the banking industry to look beyond the gains achieved during the recovery period and focus on building a more resilient, inclusive and future-ready financial system.
He said the industry’s long-term success would depend on its ability to manage risks effectively, embrace innovation and respond to the changing needs of businesses and individuals.
The Bank of Ghana’s directive to reduce non-performing loan ratios to 10 per cent by December 2026 adds urgency to these efforts, placing asset quality and prudent lending practices at the centre of the industry’s transformation agenda.
With banking sector assets and capital positions improving, the challenge now is to translate the gains into stronger credit quality, sustainable lending and lasting financial stability.
