The First National Bank of Namibia (FNB) reports that corporate credit rose by 10.3% year-on-year in August, driven by financing linked to uranium projects and stronger demand for commercial vehicles.
This lifted Private Sector Credit Extension (PSCE) to 5.8% year-on-year, up from 5.7% in July.
According to FNB’s August credit extension report, other loans and advances increased by 11.8% year-on-year, while instalment and leasing credit surged by 19.9%, mirroring a 19.3% rise in commercial vehicle sales.
By contrast, overdraft lending contracted by 20.9% year-on-year in August, compared with 23.4% in July, as companies in the manufacturing, financial and agriculture sectors continued to settle outstanding debts.
Mortgage lending remained weak, declining by 2.3% year-on-year for the tenth consecutive month, reflecting limited appetite for long-term borrowing.
“Private Sector Credit Extension (PSCE) edged up slightly to 5.8% y/y in August 2025, compared to 5.7% in July. This modest uptick underscores a gradual recovery in credit demand, primarily fuelled by corporate sector borrowing, while household credit expansion remains relatively restrained,” the report stated.
Household credit rose marginally to 2.8% year-on-year in August, from 2.7% in July. Mortgage lending increased slightly by 0.8% year-on-year, constrained by affordability challenges and a shortage of housing supply.
Despite rising property prices captured in the FNB House Price Index (Q2 2025), demand for housing loans remains muted due to higher costs and income limitations.
Other loans and advances to households held steady at 5.7% year-on-year, while instalment credit was unchanged at 15.5%. Overdraft lending showed a slight rebound but remained negative for the eighth consecutive month.
Vehicle financing provided the strongest momentum, with passenger vehicle sales climbing 35.7% year-on-year in August, despite a small monthly decline. Rental agencies were significant contributors, purchasing 85 vehicles, including 43 passenger units.
“However, inflation in housing and utilities, though moderating, continues to outpace wage growth and erode affordability. For household credit growth to strengthen sustainably, meaningful improvements in both purchasing power and housing availability will be essential, alongside continued efforts to lower borrowing costs,” the report added.
Looking ahead, analysts expect credit growth to remain resilient, supported by demand from the mining, manufacturing and construction sectors.
However, weak household income growth and elevated housing costs are likely to constrain consumer borrowing. Inflation eased to 3.2% in August, down from 3.5% in July, but is projected to edge up slightly to 3.5% by December.
