Moody's Investors Service indicated that figures published by the Bank of Ghana (BOG) show that the number of banks in the Ghanaian banking sector declined from 34 at the end of 2017 to 23 at end-2018, following the increase in the banks' minimum regulatory capital to GHS400m. The agency noted that the consolidation is credit positive for the banking sector as it eliminated weaker and undercapitalized banks that posed risks to the sector's financial stability, while supporting the banks' efficiency and profitability. It added that the banks' consolidation has led to higher capital ratios, which resulted in better loan-loss absorption capacity for the banks. It noted that the remaining banks have increased their minimum regulatory capital either internally or through capital injections and mergers. It estimated the sector's capital adequacy ratio to have increased from 17% at end-October 2016 to 20% at end-October 2018 due to capital injections, and projected it to further rise following additional recapitalization and liquidations measures. As such, it anticipated banks to be better positioned to address their high levels of non-performing loans (NPLs). In addition, Moody's anticipated consolidation measures to lead to better economies of scale for banks, help alleviate the negative pressure on interest margins and improve the banks' ability to underwrite larger corporate loans. However, the agency pointed out that Ghanaian banks still face high asset quality risks, as the sector's NPLs ratio stood at 20.1% at the end of October 2018, while interest rates are declining, which is weighing on the banks' income from government securities. 
Source: Moody's Investors Service