Banks face hard times

The banking sector faced one of its toughest times in the last quarter of 2015, with growth contracting to negative 5.4 per cent and non-performing loans (NPLs) deteriorating by 14.9 per cent to GH¢4.52 billion.

Data from the Bank of Ghana’s Financial Stability Report indicate that growth in income before tax from the banking sector recorded a negative growth over the period, from 34.9 per cent in December 2014 to negative 5.4 per cent in December 2015.

The industry’s net profit after tax contracted by 10.5 per cent in December 2015 compared with a growth of 35.5 per cent in December 2014.

Already, financial statements posted by some banks show some loses and reductions in their bottom lines.

Cost to income ratio increased to 84.6 per cent in December 2015 from 76.4 per cent in December 2014, while cost to total assets ratio increased to 15.2 per cent in December 2015 from 12.6 per cent in December 2014.

The banking industry’s return on assets (ROA) declined marginally to 4.5 per cent in December 2015 from 6.4 percent in December 2014.

Similarly, return on equity (ROE) decreased to 21.4 per cent in December 2015 from 32.3 per cent in December 2014

Also, operational cost to total