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Economic Impacts of COVID-19 on Ghana’s Banking Industry

Economic Impacts of COVID-19

The COVID-19 pandemic has dramatically gathered pace in recent days, with fresh developments almost by the hour. There are more than 55,320 confirmed cases of coronavirus across the continent, with about 19,099 recoveries and 2,083 deaths. There is a consensus among economists that the pandemic will throw the global economy into recession. The market is reacting to the pandemic as share prices fall:

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The Issue

•        Many, if not all stock markets, have been rocked by the pandemic and Ghana’s was not left out.

•        Five out of the eight listed banks have experienced a fall in their share prices, out of which three experienced a fall of 10% or more for the most part of April.

•        The hardest hit bank in April was Ecobank Ghana (EGH) falling by 20% from GHS 8.10 as at 31 December 2019 to GHS 6.50 as at 21 April 2020. However, it appears the tides have turned as EGH’s share price has risen to GHS 7.45 as at 7 May 2020.

•        With treasury bill rates and stock prices falling, gold has become the safe haven for investors globally. Gold prices are expected to have positive impact on the Ghanaian Economy and banks with exposure to mining sector will benefit.

These and related developments are expected to impact adversely on banks FX trading and remittance fee income and other sectors of the economy.

KPMG has produced this Thought Leadership which highlights the Economic Impacts of COVID-19 on Ghana’s Banking Industry and banks should do in such times of uncertainty.

© 2020 KPMG, a Ghanaian registered partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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