Over the last twelve months, N$3.37 billion worth of credit was extended, nearly double the amount issued during the same period a year prior, data from IJG Securities shows.
Individuals accounted for N$1.90 billion of the credit uptake, while corporations took up N$1.47 billion. This comes as private sector credit (PSCE) grew by 0.6% m/m or N$650.5 million, resulting in an annual growth rate of 3.0% at the end of September 2024.
“The normalised cumulative credit outstanding amounted to N$114.62 billion (removing the interbank swaps the Bank of Namibia (BoN) accounts for in non-resident private sector claims),” said IJG.
Credit extended to individuals rose by 2.9% y/y in September as all individual credit lines saw annual growth for the month.
“Overdraft facilities for individuals grew by 9.1% y/y, maintaining steady annual growth in this category since June 2023. Mortgage loans extended to individuals grew by 0.8% y/y. Other loans and advances, which include credit cards, personal loans, and term loans, increased by 6.9% y/y, while instalment credit grew by 7.4% y/y,” said the firm.
Meanwhile, credit extended to corporates increased by 3.3% y/y in September as the central bank noted an increase in business loan uptake across all categories for the month, including mortgage credit, which posted positive annual growth for the first time since September 2022, rising by 0.9% y/y.
“Corporate overdrafts decreased by 11.8% y/y, while other loans and advances grew by 8.0% y/y. Instalment credit surged by 25.0% y/y. While corporate credit demand in the country is gradually increasing, it remains relatively subdued,” said IJG.
Commercial banks’ overall liquidity increased by N$93.7 million in September, averaging N$5.84 billion, up from N$5.75 billion in August.
IJG said this increase was attributed to proceeds from diamond sales, with liquidity levels remaining healthy.
In September, the stock of international reserves fell by N$2.19 billion, or 3.7% m/m, to N$57.10 billion, providing 3.9 months of import cover, comfortably above the international benchmark of 3.0 months.
BoN attributed this decline mainly to withdrawals of Customer Foreign Currency and increased net outflows from commercial banks, driven by high foreign payments by customers
IJG believes that private sector credit in Namibia is gradually expanding, driven by modest increases in both individual and corporate borrowing.
“While individual credit lines maintain steady growth, corporate credit uptake, though improving, remains relatively subdued. Liquidity in the banking sector is stable, supported by key inflows, yet international reserves have seen a decline due to higher foreign outflows,” said the firm.
This comes as the interest rate cutting cycle is now in full swing and should see increased demand for credit from both corporates and individuals going forward. Thus, IJG expects PSCE growth to start outpacing inflation in the near term.
