THE Bank of Ghana (BoG) has urged commercial banks to put measures in place to sustain the gains made in the sector so far.
In a speech that was read on his behalf at the 39th annual general meeting of the Ghana Association of Bankers (GAB), the Governor of the Bank of Ghana, Dr Ernest Addison, also asked the banks to implement strong risk management systems in their operations to help avoid external shocks that might disrupt the industry.
He said although the industry was resilient to withstand internal shocks, there was still the need for strong policies to make the systems withstand external shocks.
We need to put in efforts to sustain the gains chalked up so far,” he stated.
Strong performance
The Governor also noted that the banking industry currently continued to exhibit strong performance despite challenges in the macroeconomic environment.
His observations come amidst concerns raised about some difficulties the banks are said to be facing in spite of the progress made.
Despite their huge profitability, there are still issues about high non-performing loans on their books, some of which might affect their financial strength and viability in the medium term if not addressed.
Dr Addison observed that while the sector remained healthy, with some improvement in assets and stated that “the recent developments in the macroeconomy may put some outside risk to the sector in the outlook; hence, banks must deploy a strong risk management system to ensure stability.”
Debt restructuring
The President of the Ghana Association of Bankers, Mansa Nettey, urged the government to ensure that its debt restructuring efforts were not carried out in a way that would erode gains made in the sector.
She said the government must ensure that it was not done at the cost of financial sector stability, inadvertently undoing so much of what had been achieved in strengthening the banking sector.
A sound and stable economy needs an equally sound and stable banking system, one that can support the country’s long-term goals,” she noted.
She said while the industry recognised drastic measures needed to be taken by the central bank in effectively combatting inflation, it was necessary that banks were encouraged with regulatory incentives to soften the impact.
We recognise that the Bank of Ghana had to front-load the tightening; however, it is necessary that we are provided with regulatory incentives to help us navigate the current economic challenges and continue to support the economy,” she stated.
Nettey, who is also the Chief Executive Officer (CEO) of Standard Chartered Bank Ghana, added that it was important that banks reviewed existing operations and investment strategies to ensure sustainable performance as they remained risk-aware and undertook effective credit management processes.
Banking fraud
The CEO of the Ghana Association of Bankers, John Awuah, in an interaction with the media after the AGM, said the banking industry was working on new strategies to deal with digital-related fraud in the system.
With regards to the increasing trend of bank staff involved in fraud cases, he said that was a worrying trend for banks.
We have been working together to find some solutions to that and if you may recall, some bank staff have been arrested and prosecuted for such offences.
“We are also retooling our infrastructure to be able to detect and avoid some of these activities,” he stated.