Bank deposits rise sharply but appetite for long term savings drop
Total banking industry deposits at the end of 2023 amounted to GH¢201.73 billion, a significant increase from the GH¢163.70 billion recorded in 2022.
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The growth underscores the competitive landscape and continuous efforts of banks to enhance their deposit bases albeit, appetite for long term savings dropped.
While major banks such as Ecobank Ghana (EBG), GCB Bank (GCB), and Stanbic Bank Ghana (SBG) continue to lead the market, players like First Atlantic Bank Limited (FABL) and Guaranty Trust Bank (GTB) are making notable strides.
According to the 2024 PwC Ghana banking Survey Report, the industry’s objective of lowering the cost of funds and depositor demands for liquidity are highlighted by current accounts’ dominance in the deposit mix.
Explaining further the developments in that space, the report observed that savings accounts also play crucial roles in the market deposit mix and increased marginally in 2023, while time and fixed deposits declined.
Economic uncertainties
The phenomenon, the report clearly observed, suggests that Ghanaians may be less willing to lock their money into long-term deposits due to economic uncertainties.
An economy reeling from the effect of the DDEP but with continuous increase in customer deposits levels in the banking sector can be attributable to a number of factors including; less investable options available to the banks; and perhaps some increases in the money supply from the monetary policy authorities.
The high returns still recorded on government treasury bills and Bank of Ghana’s Open Market Operations (OMO) may also account for the increased level in money supply and hence customer deposits.
Current accounts
The report said current accounts continue to constitute more than half of the banking industry’s total customer deposits with the services, commerce and finance sectors of the economy continuing to account for the largest portions of the loans and advances disbursed by the Ghanaian banking sector.
EBG and GCB continue to be the market leaders, growing their combined share marginally from 24.4 per cent in 2022 to 25.1 per cent in 2023.
This indicates strong customer trust and robust deposit mobilisation strategies within their combined network of over 250 branches across the country.
SBG and ABSA bank maintained their third and fourth positions from 2022 while continuing to grow their market share by 1.4 per cent in 2023.
Although Consolidated Bank Ghana (CBG) continues to improve its share of deposits in the industry, it was overtaken by First Bank Ltd (FBL), Zenith Bank Limited (ZBL), and Standard Chartered Bank (SCB), dropping from its fifth position in 2022 to eighth in 2023.
OBL and First FBN, while having smaller market shares, have shown growth, indicating successful strategies in the market.
The top 10 banks in total captured over 50 per cent of the total market share.
FABL found its way into the top 10, previously holding the 11th position in 2022 and 13th position in 2021.
The shift in depositor preferences towards more liquid assets, combined with the strategic growth of key players, highlights the sector’s adaptability to economic conditions and evolving customer needs.
As the market continues to evolve, banks that can effectively leverage customer trust and innovate their deposit mobilisation strategies are likely to maintain and enhance their market positions.
The total industry share of loans and advances stood at GH₵67.26 billion in 2023, representing a 0.15 per cent increase from GH₵67.16 billion in 2022.
The top five banks have increased their market share dominance with a combined share of 55.9 per cent.
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The commerce and finance and services sectors maintained their dominance amongst the industry loans taking up 38.9 per cent of total industry loans in 2023.
Agriculture, forestry, and fishing saw a slight decrease from 3.8 per cent to 3.2 per cent. Mining and quarrying experienced a notable rise from 2.4 per cent to 4.1 per cent. Manufacturing increased from 11.5 per cent to 13.0 per cent, continuing its upward trend.
Between 2022 and 2023, the distribution of industry loans and advances among banks exhibited notable shifts.
EBG increased its share from 14.7 per cent to 16.1 per cent, maintaining the top position. GCB saw a significant rise from 9.5 per cent to 12.0 per cent, moving from the fourth to the second rank.
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ABSA slightly increased its share from 9.8 per cent to 10.8 per cent, holding the third rank consistently. SG- GH improved it’s shared from 5.2 per cent to 6.8 per cent.
FBL increased its share from 4.7 per cent to 5.5 per cent, moving from the eighth to the sixth rank. RBL improved from 3.3 per cent to 4.1 per cent, rising from twelfth to the eighth rank. SCB increased its shares from 3.4 per cent to 3.6 per cent.
In contrast, SCB fell from the tenth to the eleventh rank, despite increasing its market share by 0.2 per cent.
In summary, the banking sector in Ghana demonstrated significant adjustments in loan allocations between 2022 and 2023.
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EBG, GCB, and ABSA consolidated their leading positions, with GCB showing the most substantial gain in share. Banks like RBL and FBL also improved their standings, while SCB experienced a decline.
Sector-wise, there was notable growth in the mining and quarrying and manufacturing sectors, both in terms of share and absolute loan values. Commerce and finance, as well as services, saw declines although they maintained the top positions, indicating a shift in loan allocation priorities. Share of industry operating assets Industry operating assets
Composition of operating assets
The key observations on the industry’s operating assets are as follows:
• Increase in total industry operating assets by GH¢43.1 billion, that is, from GH¢187.2 billion in 2022 to GH¢230.3 billion in 2023
• The major drivers of this increase are liquid assets which increased by 40.5 per cent, GH¢96.1 billion, (2022: GH¢68.4 billion) and cash assets which increased by 30.6 per cent GH¢75.2 billion (2022: GH¢57.6 billion)
• Due to the Domestic Debt Exchange Programme, bank portfolio reallocation showed a higher possession of liquid assets, representing 41.7 per cent of industry operating assets as compared to 36.5 per cent in the previous year.
• For the past five years, EBG and GCB had the lead as the top banks holding the majority of the banking industry’s operating assets. The story remains unchanged in 2023, with EBG increasing its operating assets by 33.4 per cent and SBG by 34.3 per cent.
EBG and GCB increased their cash holdings by 74.67 per cent and 26.29 per cent respectively, while SBG, ABSA and FBL also retaining their place in the top five banks having majority share of the industry’s operating assets.