The Ghana Banking Survey 2010 has noted that the liquidity and capital base of banks in the country had improved compared to previous years.
However, at the same time, quality of bank loan book had deteriorated and industry profitability declined, said the publication, a joint collaboration of PricewaterhouseCoopers (PwC) and Ghana Association of Bankers.
The survey aims to provide general information on Ghana's formal banking sector and the performance of banks operating in the country for the period between 2007 and 2009.
The banks' annual reports and audited financial statements for 2007 to 2009 were analysed.
Twenty-five out of the 26 banks currently operating in the country participated in this year's survey.
A number of banks have already complied with the minimum capital requirement mandated by Bank of Ghana with others planning on achieving the
set target by the end of 2012.
Mr Oseini Amui, Director of PwC Assurance, said focus of the survey was a review of how the banks were managing risks in the face of increased capitalisation.
He said the last three years saw total shareholders funds for the industry more than doubled from GH�792 million to GH�1.8 billion as banks injected new capital and retained earnings to meet the minimum capital requirements.
In the last five years the Ghanaian banking industry has seen a phenomenal growth arising from capital injection by existing banks to meet
minimum regulatory capital requirements.
The survey indicated that the current sustained economic reforms and stability, improvements in budget deficit, and the new oil find would attract foreign investments and lead to buoyant economic activity.
"The appetite for credit would increase and banks should focus on developing an efficient, effective, and flexible banking infrastructure to
ensure growth," it said.
Mr Amui said the stable macro-economic trends would encourage savings and with the private sector entering into the pensions market, individual pension contributions would provide another source of funds for banks.
"This would skew revenue opportunities for financial institutions towards savings and wealth management products and away from lending products," he added.
Notwithstanding this phenomenal growth, high interest rates continued to be a major concern for borrowers. Banks are being called upon to justify such high interest rate regime in the country.
The new capital requirements may lead to an improved buffer for risk absorption in the sector.
However, increased competition, growing customer demands, and new regulations are likely to continue to add complexity to business models of banks and information technology environments.
Net loans and advances remain the most significant component of operating assets and declined between 2008 and 2009. Cash assets and liquid assets showed an increase over the same period.
The industry's gross loan book grew from GH�5.7 million in 2008 to GH�6.3 million in 2009. However the gains were eroded by impairment
allowances for non-performing loans.
The increased default has been attributed to the unfavourable macro- economic conditions that prevailed for most of the year and perhaps not so
good credit decisions made by banks in prior years.
The 11 per cent growth in industry's gross loan book is the slowest in the last three years.