Ghana’s banking sector recorded a significant improvement in asset quality in June 2026, as non-performing loans declined and banks sharply increased lending to businesses and households.

According to new data from the Bank of Ghana, the stock of non-performing loans, or NPLs, fell to GH¢19.9 billion at the end of June 2026, down from GH¢20.7 billion a year earlier.

The industry’s NPL ratio also improved considerably, dropping to 16.1% from 23.1% in June 2025.

When fully provisioned loan losses are excluded, the adjusted NPL ratio declined further to 4.6% from 8.5% over the same period.

Private Sector Accounts for Most Bad Loans

Private sector borrowers continued to account for almost all non-performing loans in Ghana’s banking industry.

Their share of total NPLs increased to 98% in June 2026, compared with 96.4% a year earlier.

The public sector’s share, meanwhile, declined from 3.6% to 2%.

The Bank of Ghana said the distribution of bad loans broadly reflects the sectors where banks have the largest credit exposure.

Overall asset quality improved across most parts of the economy, although agriculture, forestry and fishing remained a major concern.

The NPL ratio for the sector increased to 65.1% in June 2026 from 59.1% in June 2025.

Despite the deterioration in agriculture, improvements across other sectors were strong enough to support an overall decline in bad loans within the banking industry.

Why Are NPLs Improving?

The Bank of Ghana attributed the improvement partly to stronger loan recovery efforts and better credit risk management by banks.

This means banks are becoming more effective at recovering overdue loans while also improving how they assess and manage borrowers before and after lending.

Lower NPL levels can strengthen bank balance sheets and potentially give banks more confidence to lend to businesses and households.

Over time, sustained improvements in asset quality could also contribute to a gradual reduction in the cost of credit, although any decline in lending rates may be marginal.

Bank Lending Jumps Nearly 40%

While bad loans were declining, overall lending by banks expanded strongly.

Gross loans and advances increased by 39.4% year-on-year to GH¢124.3 billion at the end of June 2026.

That compares with growth of just 5.5% in June 2025.

The expansion was driven mainly by lending to the private sector.

Credit to private businesses and households increased by 39.6% to GH¢119.1 billion, compared with growth of 9.2% a year earlier.

Public sector credit also recovered, rising by 5.6% to GH¢4.7 billion, after contracting by 31.3% during the corresponding period in 2025.

As a result, the private sector accounted for 96.2% of total bank credit, up from 95.1% a year earlier.

The public sector’s share declined from 4.9% to 3.8%.

Where Are Banks Lending?

Bank lending remained concentrated in a few major areas of the economy.

The services sector accounted for 36.6% of total industry credit, making it the largest recipient of bank financing.

Commerce and finance followed with 24.1%, while construction accounted for 10.7%.

Together, the three sectors represented 71.4% of total bank lending, slightly below the 72.3% recorded a year earlier.

What This Means for Investors and Borrowers

The combination of falling NPLs and faster credit growth suggests Ghana’s banking sector entered the second half of 2026 in a stronger position.

Lower bad loans can reduce pressure on banks, improve profitability and free up more capital for new lending.

At the same time, the sharp rise in private sector credit suggests banks are becoming more willing to finance businesses and households.

However, the high NPL ratio in agriculture remains a key risk to watch.

The Bank of Ghana said financial soundness indicators remained broadly positive in June 2026, supported by improvements in solvency, core liquidity and asset quality.

Efficiency and profitability indicators, however, showed mixed trends during the period.