The Bank of Ghana (BoG) has been commended for taking proactive steps to safeguard the banking sector against a potential rise in non-performing loans (NPLs) as declining interest rates encourage banks to expand lending.
Head of Trading, Global Markets at Absa Bank Ghana Limited, Andrews Akoto believes the rapid credit expansion could expose banks to higher credit risk if proper lending standards are not maintained which is why the central bank has introduced measures to ensure banks maintain prudent credit underwriting.
Speaking during Channel One TV‘s Quarterly Economic Outlook, he said, “with regard to credit quality, I think the Bank of Ghana has done a lot with that. They have been very proactive. Last year in August, they set a target for non-performing loan ratios”.
According to Andrews Akoto, although the current low-interest-rate environment is expected to accelerate credit growth and improve access to finance for businesses, particularly small and medium-sized enterprises (SMEs), it also presents the risk of weaker lending standards if banks pursue aggressive loan growth.
“Essentially, with the lower interest rates, this is very accommodative, and so there will be a lot of loan growth that the banks are postured for. You would see the banks out there actually trying to write more loans,” he stated.
Akoto believes the measures will help ensure that increased lending supports sustainable economic growth without undermining the stability of the financial sector.
“So for the banks, they now have a constraint. Even as they are expanding credit to the private sector, they are to finance the most viable ideas and make sure that they don’t run into a problem where they lend wily-nilly and when the credit cycle turns, they are in trouble again,” he explained.
Borrowing costs continue to decline following the Bank of Ghana’s monetary easing cycle – a development expected to stimulate private sector investment and business expansion.
Latest data from the Bank of Ghana show that non-performing loans rose marginally to 18.7% in February 2026, from 17.9% in January, after ending 2025 at 18.9%.
Despite the monthly increase, asset quality has improved significantly compared to a year earlier, reflecting continued progress in cleaning up the loan books of banks.
At the same time, average lending rates eased to 16.33% in April 2026, down from 20.58% in January, creating a more supportive environment for private sector borrowing.
The Bank of Ghana is targeting a further reduction in the industry’s non-performing loan ratio to 10% by the end of 2026 to strengthen financial sector resilience, improve asset quality and sustain confidence in the banking system.
