Banks investments hit ¢83.9bn; tilted towards long-term debt instruments – BoG
Banks’ investment portfolio as of the end of April 2022 remained in favour of long-term debt instruments (securities).
This is in a response to higher interest rates on the long-term instruments compared to rates on money market instruments.
According to data from the Bank of Ghana, the share of securities increased to 78.4% in April 2022, from 71.6% in April 2021.
The share of short-term bills in total investments, however, declined to 21.3%, from 28.1% during the same comparative period.
The share of bills may, however, increase as banks move to the shorter end of the market to take advantage of the increasing yields in that segment of the market following the recent hikes in the Monetary Policy Rate (MPR).
The share of equity investments remained insignificant at 0.3%.
Investments tilted less risky assets
Importantly, the asset and liability structure of the banking industry remained tilted towards less risky assets at end of April 2022.
Investments comprising bills, securities and equity grew by 14.5% to ¢83.9 billion as at end-April 2022 compared to a growth of 34.9% in April 2021.
The Central Bank however said though investments continued to dominate the asset mix, its share declined from 47.0% in April 2021 to 43.2% in April 2022 while the share of “Cash and Due from banks” increased from 18.6% to 21.7% during the same comparative period.
Loans and advances remain 2nd largest component of banks assets
Loans and advances (net), however, remained the second largest component of banks’ assets.
It recorded a higher share of 27.4% in April 2022, from 26.5% in the previous year on account of the stronger growth in credit in April 2022.
