Namibian banks lent out N$534.7 million more to businesses and households in January than they had in December, representing a 0.4% rise month-on-month.
Total credit extended to the private sector rose to N$122.85 billion, according to the latest credit update from IJG Securities.
Despite the monthly increase, annual private sector credit extension slowed to 3.9% in January from 4.4% in December, largely due to weaker uptake and net repayments by corporates.
IJG said the moderation in growth was driven mainly by reduced borrowing activity in the corporate segment, echoing the assessment of the Bank of Namibia.
“The slowdown in PSCE growth emanated from lower uptake and net repayments by the corporate sector during the period under review,” IJG noted.
Credit extended to individuals increased marginally by 0.1% month-on-month, with annual growth accelerating to 3.0% from 2.7% in December.
The monthly expansion in household credit was largely supported by overdrafts, which grew by 2.0% month-on-month and 1.4% year-on-year, marking the strongest annual increase in that category since September 2024.
Growth in other loans and advances, which include term loans, personal loans and credit card debt, remained firm at 6.9% year-on-year.
Mortgage lending to individuals declined by 0.1% month-on-month but edged up to 0.3% year-on-year, compared to 0.2% recorded in December.
IJG said the increase in overdraft usage may point to short-term liquidity pressures among households rather than confidence-driven borrowing.
On the corporate side, credit to businesses rose by 0.9% month-on-month, but annual growth slowed to 5.8%, the lowest level recorded over the past 12 months.
The central bank attributed the slowdown to weaker demand and net repayments in the manufacturing, financial and telecommunications sectors.
Corporate mortgage loans contracted by 0.3% year-on-year, while other loans and advances and overdraft facilities increased by 3.4% and 8.6%, respectively. Instalment credit to corporates recorded strong growth of 22.3% year-on-year.
“Despite relatively low interest rates, credit growth remains subdued, suggesting that monetary conditions alone are not sufficient to stimulate borrowing,” IJG said.
Average commercial bank liquidity declined to N$4.5 billion in January, down 12.4% month-on-month from N$5.2 billion in December.
The Bank of Namibia said the decline was consistent with seasonal trends, as liquidity typically falls from January to mid-March before rebounding ahead of the fiscal year-end on the back of increased government spending.
International reserves rose to N$51.9 billion in January, a 0.6% month-on-month increase, largely supported by Southern African Customs Union inflows.
According to IJG, this translated into import cover of 3.3 months, or 3.8 months when excluding oil and gas exploration-related imports.
Including financing requirements linked to oil and gas activities, reserves covered 9.6 times the currency in circulation, remaining sufficient to support the Namibian dollar’s peg to the South African rand and to meet short-term external obligations.
