Dr Ernest Addison, the Governor of the Central Bank, has announced that commercial banks in Ghana have until September of this year to provide evidence of their re-capitalization plans.
Despite the negative impact of the Domestic Debt Exchange Programme on banks' operations, they are expected to raise approximately GH¢400 million to remain operational.
During the 112th Monetary Policy Committee (MPC) press conference in Accra, Dr Addison addressed questions and stated that the Bank of Ghana will closely monitor compliance with the directive.
“Most banks are working towards that, and they have been given a period, I think up to September 2023, to submit to us [BoG] as to what their recapitalizations are, and we will be following up on that. To ensure that instead of banks distributing profits that they have started making, use those resources to rebuild their capital buffers,” emphasized Dr Ernest Addison, Governor of the Central Bank.
In 2022, Ghanaian banks recorded after-tax losses totalling GH¢6.6 billion, as reported by Dr Ernest Addison.
The negative impact of the Domestic Debt Exchange Programme (DDEP), in which 23 banks participated, largely contributed to these losses.
Dr Addison highlighted, “The 2022 audited financial statements of banks reflected the full impact of the DDEP and the challenging operating environment that prevailed in the year,” during the 112th Monetary Policy Committee (MPC) press conference.
Most banks reported substantial losses due to mark-to-market valuation losses on their holdings of Government of Ghana bonds following the implementation of the DDEP.
Additionally, losses were incurred due to higher impairments on loans and increased operating costs.
In 2022, the industry as a whole recorded a before-tax loss of GH¢8.0 billion compared to a profit of GH¢7.4 billion in 2021.
