Corporate borrowing remained the strongest driver of overall credit growth in October, but momentum continued to moderate for the second consecutive month, easing to 7.3% year-on-year from 9.5% previously, according to First National Bank (FNB) Namibia’s October Private Sector Credit Extension (PSCE) report.
FNB attributed the slowdown mainly to softer uptake of other loans and advances, which fell to 8.1% y/y as businesses in the mining, manufacturing and fishing sectors recorded net repayments.
Overdraft utilisation also declined to 13.9% y/y, a move the bank says reflects corporates taking advantage of the lower interest-rate environment to reduce short-term debt.
“Similarly, overdrafts declined further for a fourth consecutive month to 13.9% y/y in October from 16.8% y/y. This trend likely indicates that corporates are taking advantage of the low interest environment amid market uncertainties following the recent reduction in the repo rate,” the report stated.
Mortgage credit to corporates remained negative at -0.9% y/y, while instalment and leasing credit grew 22.9% y/y, offering the only meaningful support within corporate credit despite slowing commercial vehicle sales.
Overall private sector credit growth weakened to 4.7% y/y in October, down from 5.9% in September, signalling reduced demand across both corporates and households. Despite this slowdown, PSCE growth remains above the 3.4% recorded a year earlier.
Household credit growth also continued to soften, slipping to 2.8% y/y, marginally above the 2.7% recorded last year but lower than 3.4% in September. Other loans and advances eased to 8.2% y/y, while instalment and leasing credit slowed to 14.8% y/y as passenger vehicle sales rose only 7% y/y, compared to 26% in September.
Mortgage credit to households remained subdued at 0.2% y/y, reflecting structural challenges such as limited serviced land, elevated housing prices and stagnating wage growth. Household overdrafts contracted for the tenth consecutive month at -10.4% y/y, underscoring ongoing pressure on disposable incomes.
Despite recent reductions in the repo rate and prime lending margins, FNB expects household borrowing to remain muted without improvements in income levels or housing supply. The bank projects household credit to average 2.9% in 2025 and 3.4% in 2026.
Corporate borrowing is expected to continue leading overall credit expansion, with average growth of 7.8% forecast for 2025 before moderating to 2.5% in 2026. Overall PSCE is projected to average 4.8% in 2025 and 3.0% in 2026, the bank said.
