The Bank of Ghana has revealed that liquidity risk remains well-contained in the banking industry, provided the Government of Ghana (GoG) bonds are liquid.
According to the Central Bank, the stress test revealed that most banks would survive daily deposit withdrawals of 1.0% to 4.0% or 30 days if the GoG bonds market was liquid.
However, most banks would not survive a run of more than 1.0% of daily deposit withdrawals for 30 days, in case the GOG bond market is illiquid.
Interest Rates Risk
The banking sector appears robust to interest rate risk.
The results of a stress test showed that a 16.0 percentage point increase in interest rate persisting over the next year may lead to a decline in CAR from a post-Eurobond restructuring level of 13.85% to 11.57%.
The extreme decline in interest rates, the report said, may improve the solvency conditions in the banking sector given that more liabilities would reprice over the one-year horizon compared to assets. Accordingly, a steady decline in interest rates is expected to improve the solvency conditions in the banking industry.
Exchange Rate Risk
The Bank of Ghana said the exchange rate fluctuations have minimal impact on solvency conditions in the banking sector.
The test result indicates that an unexpectedly large movement of the Ghana cedi against the US dollar may have minimal direct impact on the solvency of banks, reflecting the existing limits on the NOP within the banking industry.
Latest Stories
-
‘Expired rice’: FDA fines Lamens Investments GH¢100k for regulatory violations
2 mins -
No student has been served unwholesome meals – Nana Boakye
16 mins -
Galamsey has left our river deities powerless – Fetish Priest laments
30 mins -
It was unfair to destroy Leslie’s Fantasy Dome – Okraku-Mantey
34 mins -
Expired rice scandal: We won’t jeopardize people’s health or safety for any reason – FDA
39 mins -
UniMAC to host public forum on democracy and communication
58 mins -
Expired Rice Scandal: Ablakwa slams Lamens Company for “Criminal” acts
1 hour -
Avoid the use of vituperative expressions in your campaigns – NCCE
1 hour -
No petroleum revenue allotment to industrialisation in first half of 2024 – PIAC report
1 hour -
Baba Sadiq motivated me to vie for MP position – Okraku-Mantey
2 hours -
“Black Stars failure to qualify for AFCON 2025 a big blow” – Ibrahim Tanko
2 hours -
NPP’s campaign is going very well – Nana Akomea
2 hours -
Employees must file annual income tax returns – Ghana Revenue Authority
3 hours -
L’AINE HR launches 30th-anniversary celebration with sports day
3 hours -
SAB Foundation awards fully funded tertiary scholarships to 11 students
3 hours