November 01, 2024
Finance

Private sector loans balloon to N$116.2bn

June 01, 2022
Private sector loans balloon to N$116.2bn

The Bank of Namibia says private sector loans increased by N$1.78 billion to N$116.2 billion in April.

On a year-on-year basis, private credit sector credit grew by 10.5%, compared to the 8.7% y/y growth recorded in March.

“While this was another relatively large monthly increase, this month’s increase was primarily driven by an increase in corporate credit demand versus the prior three months’ increases which were driven by increases in claims on non-resident private sectors,” according to IJG.

“Normalising for the increases in claims on non-resident private sectors the past three months sees annual PSCE growth at 3.4% y/y. On a 12-month cumulative basis N$11.0 billion worth of credit was extended to the private sector. The non-resident private sector has taken up the bulk of this issuance with debts over the past 12 months summing to N$7.05 billion, while corporates have taken up N$2.58 billion and individuals have taken up N$1.37 billion.”

Of the total amount owed to lenders, individuals came in at N$62.4 billion after a marginal 0.53% growth in April of N$331.4 million.

“Credit extended to individuals increased by 0.5% m/m and 2.2% y/y in April. Mortgage loans to individuals rose by 0.6% m/m and 2.3% y/y. Overdraft facilities increased by 1.8% m/m, but contracted by 1.0% y/y. Other loans and advances (consisting of credit card debt, personal- and term loans) rose by 0.4% m/m and 4.1% y/y,” IJG said. 

Debt held by corporates now stand at N$46.4 billion, after a N$1.4 billion increase in April.

“Credit extension to corporates grew by 3.1% m/m, following two months of declines. Growth in credit extension to corporates accelerated to 5.9% y/y in April, compared to 1.9% y/y growth registered in March. The increase was largely driven by a 6.4% m/m increase in ‘other loans and advances’. The Bank of Namibia (BoN) ascribed the increase to increased demand by corporates in the transport-, commercial property- and agricultural services sectors. Overdraft facilities to corporates rose by 1.9% m/m, but fell 4.4% y/y. Instalment credit by corporates fell by 0.6% m/m, although still recorded growth of 14.2% y/y.”

“While an increase in corporate credit demand is generally positive, the specific category that drove this increase in April is made up of shorter-term debt. Short-term debt is generally used to cover short-term cash needs, and not to expand operations, thus meaning that the increase in corporate demand in April is not necessarily an indication of investment in fixed capital, but may be into working capital.”

Mortgage loans stand at N$56.8 billion, having increased by N$402.3 million in April, while over drafts and installment credit now stands at N$13.2 billion and N$10.4 billion respectively.

The overall liquidity position of the commercial banks according to IJG fluctuated markedly in April, with the average position increasing by N$437.2 million to N$3 billion, while the daily position on the 29th was down N$1.21 billion from the N$3.70 billion recorded at the end of March.

“According to the BoN, the change was due to increased demand at the bond auctions held during the month. The repo balance rose to N$1.97 billion at the end of the month after ending March at N$936.8 million.”

The central bank’s stock of international reserves rose by 5.6% m/m or N$2.27 billion to N$43.0 billion according to IJG.

“The BoN noted that the increase was due to SACU revenue inflows and the depreciation of the Namibian dollar.”

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Last modified on Thursday, 02 June 2022 19:36
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