At the 2025 Governor’s Day and Annual Bankers’ Dinner, the Bank of Ghana Governor Dr. Johnson Pandit Asiama emphasized that non-performing loans (NPLs) are more than balance sheet figures; they represent a systemic risk that must be addressed urgently. Rather than treating them as mere statistics, the central bank has made asset quality, particularly the management of NPLs, a top-tier policy priority to safeguard financial stability and restore investor confidence.
Banks still navigating the aftermath of the Domestic Debt Exchange Programme (DDEP) have been operating under heightened scrutiny. Elevated NPL ratios, which signal borrowers’ inability to meet debt obligations, pose risks not only to individual institutions but to the broader financial system.
“Elevated non-performing loans were treated as a systemic risk, not a background statistic,” the Governor said. His statement highlighted the central bank’s decisive measures to safeguard the banking sector.
To this end, the Bank of Ghana has set a target NPL ratio of 10% by the end of 2026. This target, while ambitious, reflects the central bank’s commitment to restoring prudent lending standards and protecting depositors’ funds. Banks have been given clear timelines to reduce their NPL ratios toward the prudential benchmark, signaling that regulatory patience has limits and decisive action is expected.
Recognizing the importance of both liquidity and borrower recovery, the Bank of Ghana has encouraged loan restructuring where appropriate. “Loan restructuring was encouraged where appropriate,” Governor Asiama noted, adding that “the coming period provides a window for intelligent loan restructuring.” This approach aims to balance the need for financial discipline with pragmatic support for viable businesses facing temporary difficulties.
The central bank’s focus is not only on reducing NPLs but also on ensuring that future lending maintains strict standards. Supervisory oversight will sharpen on underwriting discipline and risk-based pricing, with the message clear: credit growth is important, but credit quality is paramount. “Credit growth will matter, but credit quality will matter more,” Dr. Asiama said, signaling a shift from aggressive lending toward sustainable, well-assessed credit expansion.
Managing non-performing loans has become a central pillar of Ghana’s banking strategy. Addressing legacy NPLs alongside rigorous underwriting standards for new lending strengthens the sector’s ability to absorb risks while promoting responsible credit growth.
