Namibia’s non-bank financial institutions (NBFIs) sector assets recorded a 11.8% growth to reach N$399.2 billion during the third quarter of 2023, official figures reveal.
The Governor of the Bank of Namibia, Johannes !Gawaxab, said the sector exhibited resilience despite the challenging macroeconomic conditions.
“The total assets held by the NBFIs increased by 1.3 % on a quarterly basis and 11.8% on an annual basis to N$399.2 billion, effectively withstanding the cooling off in global equity markets during the third quarter of 2023,” he said.
The Governor noted that the sizable year-on-year growth in the sector was attributed to base effects, with benefits paid consistently surpassing contributions received.
“In the short-to-medium term, this is not expected to threaten the viability and liquidity of the retirement funds subsector,” said !Gawaxab, further emphasising the maturity of the retirement funds subsector.
He said retirement funds maintained a funding position above the prudential level, indicating a strong solvency position.
Meanwhile, the long-term insurance subsector remained solvent, with the demand for long-term insurance products withstanding the effects of the macroeconomic environment.
“The claims experienced in long-term insurance have since normalised from the levels observed in the immediate aftermath of COVID-19. Long-term insurance assets were observed to slow marginally, in line with the contraction in stock markets during the third quarter of 2023,” he said.
Collective investment schemes were highlighted as a stable source of liquidity in the Namibian economy.
“Collective investment schemes remained stable, with no significant redemptions observed despite the macroeconomic environment,” !Gawaxab said
Notably, N$48.5 billion (56.6%) of funds under collective investment schemes management were held domestically.
This comes as the banking sector’s performance was a focal point, showcasing strong balance sheet growth.
The Governor reported a 1.5% increase in total assets for the sector during the third quarter of 2023, reaching N$174.6 billion.
This growth was attributed to increases in cash and balances at banks, short-term negotiable securities, as well as net loans and advances.
“The liquidity ratio stood at 18.5% during the third quarter of 2023, from 18.1 % in the second quarter of 2023,” Governor !Gawaxab said commenting on the liquidity ratio of the banking sector.
He attributed the increase to higher diamond sales and government payments. Furthermore, he emphasised that the banking sector maintained adequate capital levels to meet regulatory requirements and absorb potential losses.
The return on equity and return on asset ratios for the banking sector increased during the review period, primarily due to a rise in net interest income.
Governor !Gawaxab acknowledged a slight deterioration in asset quality but assured that it remained below the supervisory intervention trigger point of 6%.
Looking ahead, the governor expressed caution about potential challenges, stating, “The pressure on households and businesses due to higher interest rates and slow economic growth could further deteriorate asset quality.”
Concluding the assessment, the Macroprudential Oversight Committee determined that the financial system continues to display resilience despite the current macroeconomic conditions.
Governor !Gawaxab stated, “No further macroprudential policy intervention is required at this stage.”
However, he highlighted the ongoing commitment to monitoring developments and taking necessary remedial macroprudential action when warranted, utilising the tools at the bank’s disposal.
