The country’s Non-Bank Financial Institutions (NBFIs) sector achieved a 9% growth in assets during the third quarter of the year, reaching N$486.6 billion, recent data from the Bank of Namibia shows.
According to the Governor of the central bank, Johannes !Gawaxab, this expansion was primarily attributed to favourable global financial market conditions, steady demand for NBFI products, easing inflation rates and increased government spending.
Notably, both the retirement funds and long-term insurance subsectors outperform inflation with medium-term investment returns, maintaining sound capital reserves and solvency.
“In the third quarter of 2024, the sector experienced robust growth, with assets expanding by 9.0 per cent on a quarterly basis, reaching N$486.6 billion. The expansion in assets is attributable to conditions in global financial markets and steady demand for NBFI products, bolstered by easing inflation rates and increased government spending,” he said.
He further explained that the collective investment schemes sub-sector continued to play a crucial role in the Namibian economy by providing a significant source of liquidity, further bolstering financial system stability.
On the other hand, the banking sector also remained resilient during the review period, with total assets growing by 3.7% to N$181.0 billion in Q3 2024.
While non-performing loans (NPLs) increased slightly to 5.9%, driven by consumption-based credit, the sector maintained sufficient provisions and adequate capital to absorb potential credit losses.
“Notwithstanding this, the banks have sufficient provisions and adequate capital to absorb potential credit losses. In addition, the Bank has imposed the necessary supervisory interventions to contain credit risk and will continue to monitor the developments to ensure stability,” he said.
This comes as Namibia’s real GDP growth is projected to moderate to 3.5% in 2024 before improving to 4.0% in 2025.
The slowdown is attributed to prolonged droughts, falling diamond prices, and subdued global demand for mineral exports.
Risks to the economy remain tilted to the downside, with uncertain rainfall patterns and water supply interruptions posing challenges.
!Gawaxab also said that the property market faced challenges such as subdued mortgage credit demand, elevated interest rates, and low housing sales.
However, he said regulatory measures and accommodative monetary policies are expected to stimulate the market moving forward.
Namibia’s Interbank Settlement System (NISS) operated efficiently, with most payment obligations settled early to minimise risks.
Macroprudential policies continue to enhance the banking sector’s resilience, according to the Governor, with measures such as the easing of loan-to-value ratios and preparations for a countercyclical capital buffer already underway.
“As such, the Committee has determined that no macroprudential policy intervention is required at this stage. The MOC will continue to closely monitor the economic and financial conditions, as well as the overall risk environment, and when warranted, take the necessary remedial macroprudential action with the tools at its disposal,” he said.
