Business model analysis will be incorporated into regular supervisory evaluations by the Bank of Ghana (BoG), as the regulator aims to identify structural issues earlier.
The action, according to central bank governor Dr. Johnson Pandit Asiama, comes after a thematic evaluation of banks’ funding arrangements, asset allocation trends, earnings makeup, and governance efficacy in both baseline and stress situations.
The evaluation found structural characteristics that call for further regulatory attention as macroeconomic conditions normalise, even if it also validated the sector’s continued viability and profitability.
At a post-Monetary Policy Committee meeting in Accra, Dr. Asiama told bank chief executives that “business model analysis will now form an embedded part of supervisory assessment, supporting early identification of emerging risks and enabling timely policy and supervisory interventions.”
The strategy marks a shift from compliance-based supervision to a more proactive evaluation of banks’ capital allocation, funding risk management, and earnings generation.
Supervisors will look at governance frameworks, concentration risks, revenue stream sustainability, and company strategy resilience in a range of macroeconomic conditions.
As a result, more attention will be paid to how earnings are produced, how risks are allocated among industries, and how balance sheets react to changes in interest rates and the dynamics of sovereign exposure.
This is due to the fact that net interest income, which accounts for around 68% of sector profitability, has a structure that makes it more susceptible to changes in interest rate cycles and sovereign exposure dynamics.
As the Monetary Policy Rate was lowered from 27 percent to 18 percent during the same time period, the sector’s net interest margin already started to shrink, dropping from 14.2 percent in December 2024 to 11.5 percent by December 2025.
Even while the year-end return on equity after taxes was still strong at 30.8 percent, reflecting the high-spread environment that dominated much of 2025, the trajectory it took makes the structural reliance on interest income a growing worry.
Although such income is “nothing inherently problematic,” Dr. Asiama pointed out that diversification into fee-based and transactional services would become more and more important for earnings resilience as margins tighten.
Less than one-fifth of the industry’s total assets are loans, indicating that financial intermediation is still relatively low.
As of December 2025, total advances were GH¢111 billion, or less than 25% of total assets of GH¢446.9 billion.
As the industry continues to favour government securities over private sector lending, asset concentration in sovereign and central bank instruments is high.
Nominal private sector credit growth spent most of mid-2025 in single digits, whereas real private sector credit shrank for several months in a row, reaching a low of -7.3 percent in May before rebounding to 13.1 percent real growth by December as interest rates eased. This preference is evident in the credit data.
Following a 250 basis-point drop in the policy rate to 15.5 percent, Dr. Asiama pointed out that the supervisory framework needs to change in tandem with the shift in monetary policy from stabilisation to calibration.
Non-performing loans are still higher than benchmarks even though they have decreased, going from 21.8 percent in December 2024 to 18.9 percent in December 2025.
The Governor emphasised that as banks expand their exposure to manufacturing, small and medium-sized businesses, agriculture, and other value-adding industries, underwriting discipline and improved sectoral risk assessment will be essential.
However, the industry does come into this next stage with stronger cash.
The capital adequacy ratio increased from 11.3 percent at the end of 2024 to 17.5 percent by December 2025, and it remained at that level even after removing regulatory reliefs.
The basis for the intentional intermediation that Governor Asiama was advocating for when he stated: “Stability must now translate into purposeful intermediation” is provided by the buffer rebuilding, which was primarily a post-DDEP requirement.
The macroeconomic environment has improved since the central bank’s decision. The first three quarters of 2025 had a 6.1 percent increase in real GDP, mostly due to the services and agricultural sectors.
The rate of inflation has drastically decreased, from 23.8 percent in January 2026 to 3.8 percent in January 2026, as confidence has increased due to exchange rate stability and budget reduction.
Lending rates have started to drop and real private sector credit growth is rebounding as inflation forecasts have stabilised and financial conditions have eased.
The Bank anticipates that this pattern will persist, opening doors for more in-depth intermediation.
The central bank, however, maintains that it is anxious to prevent a recurrence of previous cycles in which the rapid expansion of credit was a contributing factor to the decline in asset quality.
Source: newsthemegh.com