Namibia’s financial system remains stable, with the banking sector’s assets growing by 2,8% to N$177,9 billion in the first quarter of 2024.
This is despite rising vulnerabilities and risks, particularly concerns around rising non-performing loans.
This was said by the Bank of Namibia’s (BoN) Macro-prudential Oversight Committee (MOC) after holding its first meeting of the year on 10 July to assess potential risks and vulnerabilities in the financial system.
According to BoN deputy governor Leonie Dunn, the financial sector maintained adequate capital and liquidity buffers to withstand potential losses.
“In addition, the interbank settlement system operations remained efficient,” Dunn said in a statement on Friday.
Dunn further said the economy had recorded positive growth of 4,7% during the first quarter of 2024, although it is expected to moderate this year before picking up in 2025. This is compared to a growth of 5,3% in the corresponding quarter of 2023.
“This is mainly due to positive growth during the first quarter of 2024 for the electricity and water, wholesale and retail, transport and storage, as well as the mining and quarrying sectors.”
She said while the domestic property market faced constraints, the outlook remained relatively positive due to policy initiatives introduced to improve market conditions.
The property sales volumes remained low in the residential real estate market, reflecting tight financing conditions.
Other key indicators, such as growth in the rental price and the price-to-rent ratio, showed positive growth, while growth in the house price index, and the deposit-to-rent ratio remained stable.
Dunn said the Non-Bank Financial Institutions sector also remained stable and resilient amid sluggish economic activity and an elevated interest rate environment.
“The NBFI assets grew from N$414,8 billion to N$426,8 billion during the first quarter of 2024. The retirement funds subsector maintained a funding position above the prudential limit during the first quarter of 2024, indicating resilience and ability to meet current obligations,” she said.
The statement noted that the long-term insurance subsector maintained sound capital reserves and remained solvent.
Additionally, the subsector’s return on assets continued its upward trajectory mainly due to a recovery in claims.
“Collective investment schemes (CIS) remained stable during the period under review and remain a significant source of liquidity in the economy, with N$49,9 billion or 54% of funds under CIS management held domestically,” Dunn said.
The committee determined that no macro-prudential policy intervention is required at this stage, however, the MOC will continue to closely monitor the economic and financial conditions, as well as the overall risk environment.
She said when warranted, the committee will take the necessary remedial macro-prudential action with the tools at its disposal.
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