Banks in Ghana posted development of 38.8% in revenue for the very first two months of this year despite the coronavirus pandemic.
According to the April 2020 Banking Sector Report, banks in Ghana earnings out turn was stronger in the first 2 months of 2020 and higher than the 31.5% development in the same period in 2015.
This is because of considerable increases in banks’ earnings, which surpassed the development in business expenses.
Net interest income grew by 25.9% on the back of a 22% growth in interest income, higher than the 14% boost in interest costs.
In terms of the composition of banks’ income, strong credit growth resulted in an increase in the share of income from loans compared with the share of other income sources.
The share of interest income from loans in total income increased to 38.7% from 35.9% during the review period.
Other sources of income for banks in Ghana, namely, investments and fees and commissions recorded declines in their relative shares within the same comparative period.
In spite of these developments, the components of the banking industry’s income continued to reflect the composition of its assets.
As such, the share of income from investments remained the largest, followed by income from loans, fees and commissions, and other income.
Return on Assets & Return on Equity
According to the report, the stronger profit outturn translated into improved profitability indicators. Return on Equity (ROE) went up by 25.5% at end-February 2020 from 20.1% at end-February 2019.
On the other hand, Return on Assets (ROA) also grew by 4.9% compared with 4.2%. Increases in both ratios signify enhanced resource utilization of both shareholders’ funds and total assets over the comparative periods.
