The Bank of Ghana (BoG) has revealed that Treasury bills (T-bills) accounted for a significant 62% of banks' investments in 2025, highlighting the growing reliance of financial institutions on short-term government securities. This trend is a notable shift in the investment portfolio of banks, as they seek to maximize returns amidst a slowing deposit growth rate. According to the BoG, the share of deposits in banks' liabilities and shareholders' funds decreased to 72.8% in December 2025 from 75.1% in December 2024, reflecting the slowdown in deposit growth in 2025.
Slowdown in Deposit Growth
The decrease in deposit growth has significant implications for the banking sector, as it affects the ability of banks to lend and invest. Dr. Ernest Addison, Governor of the Bank of Ghana, noted that "the slowdown in deposit growth is a concern for the banking sector, as it limits the ability of banks to extend credit to the private sector." He added that "the BoG is monitoring the situation closely and working with banks to ensure that they maintain a stable and diversified investment portfolio." The slowdown in deposit growth can be attributed to various factors, including a decrease in consumer spending and a rise in alternative investment options.
Shift to Short-Term Investments
The shift towards short-term investments, such as T-bills, is a strategic move by banks to manage their risk exposure and maximize returns. Mr. Kwame Owusu-Boateng, a banking expert, explained that "T-bills offer a low-risk investment option with a relatively high return, making them an attractive option for banks in a slowing economy." He added that "the high demand for T-bills is also driven by the need for banks to maintain a high level of liquidity, as required by regulatory authorities." The high demand for T-bills has led to an increase in their yields, making them a more attractive investment option for banks.
"The investment in T-bills is a short-term strategy that allows banks to manage their liquidity and risk exposure. However, it is essential for banks to maintain a diversified investment portfolio to ensure long-term sustainability," said Dr. Joseph Abbey, a financial analyst.
Implications for the Economy
The dominance of T-bills in bank investments has significant implications for the economy. The high demand for T-bills can lead to an increase in their yields, making it more expensive for the government to borrow. This can have a ripple effect on the economy, as higher borrowing costs can lead to an increase in interest rates, making it more expensive for businesses and individuals to access credit. Mr. Felix Addo, a economist, noted that "the high demand for T-bills can also lead to a decrease in the availability of credit for the private sector, as banks prefer to invest in low-risk government securities rather than lending to businesses and individuals."
Furthermore, the reliance on T-bills can also limit the ability of banks to support long-term economic growth. Dr. Beatrice Sabti, a development economist, explained that "banks have a critical role to play in supporting economic growth by providing credit to businesses and individuals. However, the dominance of T-bills in bank investments can limit their ability to do so, as they prefer to invest in short-term government securities rather than taking on the risk of lending to the private sector."
Regulatory Response
The BoG has responded to the trend by introducing regulatory measures to encourage banks to diversify their investment portfolios. Dr. Addison noted that "the BoG is working closely with banks to ensure that they maintain a stable and diversified investment portfolio, and we are exploring options to encourage banks to lend more to the private sector." The regulatory measures include the introduction of new guidelines on investment portfolios and the establishment of a credit guarantee scheme to support lending to small and medium-sized enterprises.
In addition to the regulatory measures, the BoG is also working with banks to improve their risk management practices. Mr. Owusu-Boateng explained that "the BoG is providing guidance and support to banks to help them manage their risk exposure and maintain a stable investment portfolio." This includes providing training and technical assistance to banks on risk management and investment portfolio management.
Conclusion
In conclusion, the dominance of T-bills in bank investments in 2025 is a significant trend that has implications for the banking sector and the economy as a whole. While the shift towards short-term investments is a strategic move by banks to manage their risk exposure and maximize returns, it is essential for banks to maintain a diversified investment portfolio to ensure long-term sustainability. The BoG's regulatory response is a step in the right direction, and it is expected that the banking sector will continue to evolve and adapt to the changing economic landscape. As Dr. Abbey noted, "the banking sector is expected to play a critical role in supporting economic growth, and it is essential for banks to maintain a stable and diversified investment portfolio to achieve this goal." The future of the banking sector will depend on its ability to balance risk management with the need to support economic growth, and it is likely that the sector will continue to evolve and adapt to the changing economic landscape.
