Business, consumer confidence fall amidst tight credit stance – Bank of Ghana

The confidence of both businesses and consumers dipped during the third quarter of 2013, a latest Bank of Ghana survey has shown.

The central bank says the overall consumer confidence index stood at 89.3 in October, down from 97.2 in August this year.

And similarly, the business sentiments indicator dipped to 90.8 in September from 92.4 in June.

The BoG survey also indicated heightened inflation expectations by both consumers and businesses.

Meanwhile the latest BoG survey of credit conditions showed a general tightening of credit. The central bank observed that credit stance for all loan types tightened during 2013 third quarter.

The survey showed “the number of loan applications from households, SMEs and large enterprises, a measure of credit demand, decreased”.

The BoG cited poor credit history, low cash flows, inadequate security, weak management and weak financials as among the principal reasons for rejection of loan applications by commercial banks.

The non-performing loans (NPL) ratio within the banking industry decreased to 12.3% in September 2013, from 13.1% in September 2012, while the ratio excluding the loss category, declined to 5% from 6.5% in the same period last year.

The central bank noted that the average lending rates of commercial banks declined marginally to 25.6% in October 2013, from 25.7% in December 2012

The pace of annual growth in private sector credit slowed to 25% at the end of October 2013, compared to 44.3% during the same period in 2012, the BoG added.

The annual growth of real private sector credit was 10.5% in October 2013, compared to a 30.5% growth in 2012, according to the BoG.

By Ekow Quandzie