The central bank explained that the asset growth was mainly funded by total deposits which went up by 10.6 per cent on a year-on-year basis.

At a news briefing in Accra on Monday to announce the outcome of the Monetary Policy Committee (MPC) meeting, the Governor of the Bank of Ghana, Dr. Ernest Addison, said the banking sector as a whole continued to be liquid, profitable and solvent although asset quality remained a concern.

He said the industry’s Capital Adequacy Ratio (CAR), which fell to 14.8 per cent in June 2017, after the AQR exercise, increased to 18.0 per cent at the end of December 2017, significantly above the 10.0 per cent prudential requirements after implementation of the capital restoration plans in the sector.

Return on assets improved from 17.6 per cent at the end of December 2016 to 18.8 per cent at the end of December 2017, he said.

Dr. Addison who is also the Chairman of the MPC, said efficiency indicators on costs to income and operational costs to gross income remained largely unchanged compared to a year ago.

“Other financial soundness indicators recorded some improvements, but the quality of banks’ loan portfolio still remains a source of concern,” he said.

The Governor said the Non-Performing Loans (NPLs) ratio moved from 21.6 per cent at the end of October to 22.7 per cent in December 2017, with over half of these loans in the loan loss category.

“Adjusting for the loss category that has been fully provisioned for, the ratio drops to 10.8 per cent.14,” he said.

The mandate for the MPC is derived from section 27 of the Bank of Ghana Act 612 (2002), which requires the establishment of an MPC to be responsible for formulating and implementing policy in the areas of money, banking and credit with the main aim of maintaining stable prices conducive to balanced and stable economic growth as well as promoting and preserving monetary stability.

The committee sets an interest rate it judges to be consistent with an inflation target and an objective of growth.