Deposits remained the main source of funding for the industry
Ecobank Ghana and GCB Bank controlled about 23.9% of the banking industry market share in terms of deposits in 2020.
The year-on-year growth of deposits went up by 25.1% in 2020 recording GH¢104 billion.
GH¢149.3bn total assets
Total assets of the banking sector stood at GH¢149.3 billion as at December 2020, indicating a y/y growth of 15.7% (2019: 20.2%).
A research analysis by investment firm Tesah Capital showed that Ecobank Ghana and GCB Bank continued to show their dominance in the banking industry, controlling almost a quarter of the industry’s deposits.
According to the research report, while Ecobank Ghana led the pack with 12.4% of the market share of deposits in 2020, GCB Bank controlled about 11% of all deposits.
It pointed out that the two banks operate digital platform, which enabled customers to undertake several transactions, and this helped them to grow and increase their deposits.
Stanbic, Absa, Consolidated Bank Ghana, Fidelity and Standard Chartered Bank placed third, fourth, fifth, sixth and seventh respectively, the report said.
Growth in deposits
Deposits remained the main source of funding for the industry, with its share increasing from 64.7% to 69.6% between 2019 and 2020.
The lower growth in 2020 was due to the adverse impact of the COVID-19 pandemic on banking activities in 2020.
On loans, Ecobank Ghana dominated the industry, controlling 10.4% of the assets last year.
Per the report, Absa, Stanbic and GCB followed suit in second, third and fourth positions respectively.
In the report, Zenith Bank maintained its number one position as the best bank in financial performance in 2020.
Stanchart moved to second position whilst Ecobank, which was second in 2019, placed third and GCB Bank came fourth respectively, it said
On the other hand, FBN Ghana, Universal Merchant Bank (UMB) and Prudential Bank were the least ranked banks.
The rankings emanated from an assessment of the creditworthiness and performance of the banks using capital adequacy ratio, assets size, management capability, earnings and liquidity.
The bank performance evaluation rankings were based on the financial statements released by the banks for FY 2020.
The rankings focused on 21 out of the 23 commercial banks in Ghana, as the financials of OMNIBSIC and National Investment Bank were unavailable at the time of the analysis.
According to the report, net advances formed the larger proportion of the asset mix until 2018 where investment began to dominate.
The sharp growth in total investments in 2018 was largely due to the special resolution bonds issued to Consolidated Bank Ghana (CBG).
Investment holdings increased in 2020 as banks moved to less risky assets, i.e. government securities as a result of the pandemic-induced elevated credit risks.
Although investment holdings of banks increased in 2020, the structure of their investment portfolio remained largely the same.
The movement towards longer-dated instruments, which led to an increase in the share of securities in total investments from 1.1% in 2018 to 1.8% 2019, was reversed in 2020 to 0.4%.
Banks’ appetite for government securities remains strong as they reduce the size of their loan books in response to the risks presented by the pandemic on banking activities.
Credit growth slowed in 2020 from 25.7% in 2019 to 4.6%.
This was occasioned by the outbreak of the pandemic and its resultant effect on businesses and loan repayments.
Private sector credit still constitutes the larger proportion of credit in the banking sector.
Its share increased to 91.1% in 2020 from 87.1% in 2019 while the share of the public sector decreased to 8.9% from 12.6% over the same period.