BY Issah Olegor
The banking sector ended 2025 on a significantly stronger footing, with new industry figures showing improved capital reserves, stronger balance sheets, and declining bad loans, signaling growing stability within the financial system after years of economic turbulence.
According to the latest industry analysis released by the Ghana Association of Banks, the sector’s Capital Adequacy Ratio (CAR) — a major indicator of a bank’s financial strength and ability to absorb shocks — rose from 14 percent in 2024 to 17.5 percent in 2025.
Even more significantly, the Capital Adequacy Ratio excluding regulatory reliefs improved sharply from 11.3 percent to 17.5 percent, indicating that banks are increasingly relying on their own financial strength rather than temporary support measures introduced by regulators during periods of economic stress.
The latest figures reflect what analysts describe as a steady recovery within the banking industry following the combined impact of the domestic debt exchange programme, rising inflation, currency pressures, and elevated credit risks that strained many financial institutions in recent years.
The banking sector had faced severe pressure during Ghana’s recent economic crisis, with several banks grappling with deteriorating asset quality, reduced profitability, and weakened capital positions after government’s debt restructuring programme affected the value of financial assets held by banks.
However, the new report suggests the industry is gradually rebuilding resilience through stronger capitalisation, prudent risk management, and improved loan recovery efforts.
One of the clearest signs of recovery is the decline in non-performing loans (NPLs), which remain a major concern for the banking industry. The report showed that the sector’s NPL ratio declined from 21.8 percent to 18.9 percent.
More notably, non-performing loans excluding loss-category loans dropped significantly from 8.5 percent to 5 percent, reflecting tighter credit assessment procedures and stronger loan recovery mechanisms being implemented by banks.
Industry watchers say the decline in bad loans is critical to restoring confidence in the banking system because it improves banks’ ability to lend to businesses and households while reducing financial vulnerabilities.
The report also showed strong growth across key balance sheet indicators within the industry.
Total banking sector assets increased by 21.5 percent from GH¢367.8 billion in 2024 to GH¢446.9 billion in 2025, underscoring expanding financial activity within the sector.
Customer deposits also recorded strong growth, rising by 17.8 percent from GH¢276.2 billion to GH¢325.3 billion during the period under review.
Analysts say the rise in deposits reflects improving public confidence in the banking sector after years of uncertainty and financial sector reforms.
At the same time, total advances by banks increased by 16 percent from GH¢95.7 billion to GH¢111 billion, suggesting a gradual recovery in lending activities to businesses and consumers.
The rebound in credit growth is expected to support economic activity, especially as businesses continue to recover from recent macroeconomic challenges.
Financial experts believe the stronger capital buffers now being built by banks place the sector in a better position to withstand future economic shocks without threatening depositors’ funds or financial stability.
The improved performance also comes amid continued regulatory oversight by the Bank of Ghana, which has in recent years implemented several reforms aimed at strengthening solvency, improving governance standards, and enhancing risk management practices within the financial sector.
Taken together, the latest indicators suggest the banking industry is gradually moving beyond survival mode into a phase of consolidation and recovery, supported by stronger balance sheets, improved asset quality, and renewed investor and depositor confidence.
