The 2023 Ghana Banking Survey conducted by auditing firm PwC has highlighted significant challenges faced by banks due to losses from the Domestic Debt Exchange Programme (DDEP).
According to the survey, 92% of banks without government control or ownership admitted that losses from the DDEP were their biggest pain. In comparison, 75% of government-owned or government-controlled banks shared the same view.
The survey revealed that many banks were ill-prepared for the DDEP and missed critical signs indicating the risks to their investments in government securities.
Post the implementation of the DDEP, the survey showed that 100% of local banks, 83% of regional banks, and 67% of international banks flagged profitability as their major concern. For liquidity concerns, regional banks were the most worried at 100%, followed by local banks at 87%.
Regarding Capital Adequacy and Solvency concerns, local banks expressed the highest anxiety at 100%, followed by regional and first-quartile banks at 83% each.
On the issue of investor perceptions, international banks and second-quartile banks exhibited concern about how investors might perceive the worth of their businesses, at 67% and 60%, respectively.
Furthermore, the survey indicated that changes in customer behaviours attributed to the DDEP could negatively impact the industry's prospects if not managed successfully.
Notably, there was a depressed demand for securities issued by the government, with 69% of bank executives noting this change.
Regional banks, first quartile banks, and second quartile banks were the most affected, with 100%, 83%, and 80% respectively, reporting a decrease in demand.
The banks acknowledged that the road to profitability would not be smooth sailing. Bank executives were unanimous in their expectation of a challenging macroeconomic outlook over the near-to-medium term while remaining confident in a quick comeback.