Rating Agency Lauds Ghana’s Banking Reforms

• Ratings Agency, Moody’s says Ghana’s banking sector consolidation trend is credit positive. According to Moody’s, the sector’s consolidation is credit positive because it supports financial stability by removing weaker banks and gives remaining banks pricing power, enhancing their efficiency and profitability.

• The rating is Partly because of capital injections, which was made possible through the Bank of Ghana’s recapitalization reforms. As such, the banking sectors capital adequacy ratio increased to 20% in October 2018 from 17% in October 2016, and currently we expect it to be higher following completion of the recapitalization efforts and further liquidations. We expect surviving banks to be better capitalized, and therefore better positioned to resolve their high nonperforming loans (NPLs).

• This is good news. After all, our economic gains have increased under this government: Price Water House coopers predicted a favourable year for the banking sector in 2019; there was the Standard and Poor ratings that increased Ghana’s economic ratings, and now moody’s has also lauded the central banks recapitalization efforts.

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