For years, Non-Performing Loans (NPLs) have been the proverbial albatross around the neck of Ghana’s banking sector.
Indigenous banks, in particular, have often borne the bigger brunt of this NPL burden, struggling with high default rates that stifle liquidity, erode capital, and limit their ability to support the local economy.
However, the latest financial statement from CalBank PLC suggests a significant break from this narrative, marking a bold step forward in credit risk management.
A Dramatic Cleanup of the Books
According to its unaudited financial statements for the first quarter of 2026, CalBank has achieved a massive reduction in its NPL ratio, which dropped from a staggering 45.5% in March 2025 to 15.1% in March 2026, though still high.
An NPL ratio measures the percentage of a bank’s total loans that are in default or close to it. In simple terms, while nearly half of CalBank’s loan book was “troubled just a year ago, that figure has been slashed by two-thirds.
This improvement is further reflected in the bank’s net impairment gain on financial instruments, which stood at GHS 3.4 million for the quarter, indicating a stabilization in the quality of its lending.
The Significance of Indigenous Banking
This recovery is more than just a win for CalBank; it serves as a critical signal for the indigenous banking sector. High NPLs have historically been a primary reason for regulatory interventions and a loss of public confidence in local banks.
By aggressively addressing its bad debt, CalBank is demonstrating that local institutions can successfully navigate the “albatross” of credit risk, provided there is a disciplined approach to risk monitoring and reporting.
The bank’s Capital Adequacy Ratio (CAR) has also benefited from this cleanup, swinging from a negative (7.1%) in 2025 to a healthy 17.2% in 2026.
This suggests that as the weight of bad loans was lifted, the bank’s underlying financial strength was allowed to resurface.
The Critical Question: Is it Sustainable?
While the 30.4 percentage point drop in NPLs is a feat worth celebrating, industry observers are asking: Can this momentum be maintained?
A closer look at the balance sheet reveals that the bank’s total loans and advances to customers decreased significantly, falling from GHS 2.2 billion.
Should the loans and advances pick up, could the declining NPLs be sustained?
