The Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (NAMFISA) reported a 7.1% growth in the banking sector’s total assets in 2024.
According to the latest Financial Stability Report (FSR), the surge in assets was driven by increases in short-term negotiable securities, net loans and advances, underlining the sector’s sound financial footing. The report highlighted that asset quality improved last year.
“Asset quality, as measured by the non-performing loans to gross loans ratio, declined to 5.6% at the end of 2024 from 5.9% in 2023. This was primarily driven by growth in total loans and advances, which outpaced the growth in non-performing loans, as supported by an accommodative monetary policy stance in the second half of 2024,” the report read.
According to the report, the banking industry remains well-capitalised, profitable, and liquid, as profitability was supported by stronger net income, while banks’ liquid asset holdings exceeded prudential requirements, ensuring their ability to meet short-term obligations.
“In addition, the banks are well positioned to manage loan defaults, as they have sufficient provisions and adequate capital to absorb potential credit losses. Overall, the banking sector remained stable under the prevailing economic conditions and continued to extend credit to the real economy,” the report said.
The report highlighted that household debt growth increased by 0.7 percentage points, reaching 4.0% by the end of 2024. However, the ratio of household debt to disposable income continued to decline, falling from 44.7% in 2023 to 43.2% in 2024.
This improvement was attributed to rising household incomes driven by salary increments and government-implemented tax relief measures.
The report noted that the increase in corporate debt was due to higher foreign trade credit uptake.
“Total corporate debt increased to N$191.4 billion, mainly due to mining companies securing loans from their foreign parent entities, coupled with a higher foreign trade credit uptake by non-financial corporations. As a result, the corporate sector’s debt-to-GDP ratio increased marginally from 73.0% in 2023 to 73.6% in 2024. Short-term financial stability risks from corporate debt remain moderate, given the lower growth in corporate debt during 2024,” the report read.
Additionally, the FSR emphasised that the financial system in Namibia remained stable, sound, and resilient, with no significant disruptions or disorderly functioning of key financial services despite the moderation of economic growth and prevailing risks.
