Banks write off GH¢1.39bn in bad loans

Banks operating in Ghana wrote off GH¢1.39 billion in bad loans in the first ten months of 2025 as part of efforts to clean up balance sheets and manage persistent credit risks in the economy.

The surge in write-offs reflected deliberate steps by banks to deal with legacy loan losses, strengthen capital positions and improve asset quality amid cautious lending conditions.

Data from the Domestic Money Banks Income Statement showed that the write-offs represented a 56.7 per cent increase over the period, far above the 10 per cent rise recorded in October 2024, pointing to a more aggressive provisioning stance across the sector.

Provisioning drive

The sharp rise in write-offs was largely driven by higher provisions for loan losses, depreciation and other related charges, as banks responded to lingering weaknesses in some loan portfolios.

Industry analysts said the move suggested that banks were prioritising long-term stability over short-term profitability by recognising impaired assets more decisively.

Despite the higher cost of write-offs, the clean-up exercise appeared to be yielding results, with data showing a notable improvement in the industry’s overall asset quality.

Asset quality improves

The banking sector’s non-performing loans (NPL) ratio declined to 19.5 per cent in October 2025, compared with 22.7 per cent in the same period last year, reflecting better credit conditions and improved loan performance.

When adjusted for fully provisioned loan loss categories, the NPL ratio also improved to 6.8 per cent at the end of October 2025, down from 9.4 per cent a year earlier.

According to the data, the improvement was driven mainly by a reduction in sub-standard loans and a shift in the composition of NPLs, with a higher proportion classified as loss and subsequently written off.

A senior banking source said the decline showed that the sector was gradually working through problem assets accumulated in previous years, he said.

Lower NPL stock

The fall in the NPL ratio was supported by a contraction in the absolute stock of non-performing loans, alongside a modest recovery in credit growth during the period.

Total NPLs in the banking industry declined by 6.2 per cent to GH₵20.1 billion in October 2025, from GH₵21.4 billion in October 2024.

This reduction reflected a combination of increased loan write-offs, improved repayments by borrowers and the appreciation of the Ghana cedi, which lowered the local currency value of some foreign currency-denominated loans.

An economist said the currency gains had provided some relief to banks with foreign currency exposures, he said.