Namibia’s banking sector asset base grew to N$173.2 billion during the first quarter of 2023, after showing a 5.3% growth, an official has said.
According to the Bank of Namibia’s governor Johannes !Gawaxab the banking sector liquidity ratio stood at 19.1%, an increase of 17.8% in the last quarter of 2022.
He attributed the increase to improved diamond sales, government spending, capital inflows and subdued private sector credit extension.
“The banking sector’s balance sheet growth remained strong, reflecting an improved liquidity position and adequate capital levels. The banking sector maintained capital levels to meet the regulatory requirements and absorb potential losses.” the governor said, following the Macroprudential Oversight Committee meeting.
Similarly, the Non-Banking Financial Institutions (NBFIs), also remained financially sound, with the investment assets returning a growth rate that coincides with the financial market recovery.
“The assets held increased by 4.3% on a quarterly basis to N$381.8 billion during the first quarter of 2023. The increase was mainly due to growth observed in the long-term insurance and retirement fund subsector,” !Gawaxab said.
According to Macroprudential Oversight Committee, retirement funds were solvent with a funding position at 101.2%, thus remaining above the prudential limit.
Similarly returns on investments increased to 4.6 percent in the first quarter of 2023 from 3.9% recorded in the last quarter of 2022, “recovering from the bearish first three quarters of 2022.”
“However, it is not expected that retirement funds’ viability will be affected in the short to medium term, given the sufficiency of reserve levels. Similarly, the long-term insurance (LTIs) sub-sector remained solvent with adequate capital reserves. The claims in the LTI sector continued to recover from the elevated levels observed in 2021, which were as a result of relatively higher mortality rates attributable to the Delta Variant of Covid-19,” said !Gawaxab.
He said to support economic activity, the Bank will pursue ministerial issuance of regulations to operationalise the macroprudential policy taken.
In addition, the Macroprudential Oversight Committee deliberated and deemed it important to recommend a policy intervention on the existing loan to value regulation, considering the current macroeconomic conditions.
Overall, the central bank said the domestic financial system continues to demonstrate stability, robustness and resilience.
In terms of Namibia’s real Gross Domestic Product (GDP) growth, the governor said it is expected to slow down in 2023 and 2024, mainly due to weaker global demand, contrary to the robust growth of 4.6 percent observed in 2022.
“Therefore, the domestic real GDP growth is projected to moderate to 3.0 percent in 2023 and is expected to slow down further to 2.9 percent in 2024. The moderation is mainly on account of global monetary policy tightening and the ongoing geopolitical tensions,” he said.
This is further pushed by water supply interruptions at the coast, climate change and spillover effects of electricity cuts in South Africa continue to increase risks for the domestic economy.
