Ghana’s banking sector wrote off GH¢883.7 million in bad loans within the first four months of 2026, highlighting continued pressure on banks’ balance sheets despite recent improvements in the industry’s asset quality.
The figure represents a 35.1% increase compared with the GH¢654.2 million recorded during the same period in April 2025, according to data from the Domestic Money Banks Income Statement.
The Bank of Ghana (BoG) explained that the total write-off comprised loan losses, depreciation and other related items, reflecting the cost banks continue to bear from credit defaults and uncollectable facilities.
A loan write-off is an accounting measure used by banks to remove loans considered unlikely to be recovered, often those that have remained unpaid for more than 180 days, from their active balance sheets.
While the action helps clean up financial statements, it also represents a direct loss of expected income and signals weaknesses in credit repayment conditions.
Credit risks remain elevated
The increase in loan write-offs comes amid continued concerns over asset quality risks within the banking sector, although there have been signs of gradual improvement.
The industry’s Non-Performing Loans (NPL) ratio declined to 18% in April 2026, from 23.6% in April 2025, indicating some recovery in banks’ loan portfolios.
Similarly, the NPL ratio adjusted for the fully provisioned loan loss category reduced from 9% to 5.6% over the same period, suggesting that banks have strengthened their buffers against potential losses.
The total stock of non-performing loans also declined marginally to GH¢20.7 billion in April 2026, from GH¢21.7 billion recorded in April 2025.
However, the level remains a major concern for the financial sector, with banks still carrying significant volumes of distressed credit that could limit their ability to expand lending to businesses and households.
Private sector accounts for majority of bad loans
The private sector continued to account for the overwhelming share of non-performing loans, largely because it holds the largest proportion of bank credit.
Data from the central bank showed that the private sector’s contribution to total NPLs increased to 98.2% in April 2026, from 96.5% in April 2025.
Meanwhile, the share of non-performing loans attributable to the public sector declined to 1.8%, from 3.5% during the same period.
The dominance of private sector defaults reflects ongoing challenges faced by businesses, including high operating costs, financing pressures, weak cash flows and difficulties in meeting repayment obligations.
Agriculture sector remains major risk area
Although the banking industry recorded improvements in loan quality across most sectors, the agriculture, forestry and fishing sector continued to deteriorate.
The NPL ratio for the sector increased sharply from 62.1% in April 2025 to 66.1% in April 2026, making it one of the most vulnerable segments of the economy.
The worsening performance in agriculture raises concerns about access to finance for farmers and agribusinesses, particularly as the sector remains critical to employment, food security and economic growth.
Banks may become increasingly cautious in extending credit to agricultural businesses if repayment risks continue to rise, potentially affecting investment and productivity in the sector.
Implications for banking sector
The rising value of loan write-offs presents several challenges for banks operating in Ghana.
First, higher bad debt expenses could weaken profitability by reducing interest income and increasing impairment charges. Although banks have strengthened their capital positions in recent years, persistent credit losses could place pressure on earnings and limit funds available for expansion.
Second, continued high NPL levels could make banks more conservative in lending. Financial institutions may tighten credit requirements, increase collateral demands or prioritise lending to lower-risk customers, making it more difficult for small and medium-sized enterprises to access financing.
Third, the situation could slow private sector growth. Businesses rely heavily on bank credit to expand operations, purchase equipment and create jobs. Reduced lending appetite could therefore affect investment, employment creation and economic activity.
Wider economic impact
For the broader economy, rising bad loans could undermine efforts to deepen financial intermediation and support economic growth.
A banking sector burdened by non-performing assets may struggle to channel enough resources into productive sectors such as manufacturing, agriculture, construction and small businesses.
The continued deterioration in agricultural loans is particularly concerning because limited access to credit could weaken efforts to increase food production, improve value chains and create rural employment.
However, the decline in the overall NPL ratio suggests that measures taken by banks and regulators to improve asset quality are beginning to yield results. The challenge now will be ensuring that the improvement is sustained while addressing persistent vulnerabilities, especially in sectors with high default rates.
The latest figures underline the need for stronger credit risk management, improved borrower monitoring, better economic conditions for businesses and targeted interventions to support vulnerable sectors.
Without these measures, analysts warn that continued loan defaults could constrain banks’ ability to finance growth and weaken the economy’s recovery momentum.
