NAMIBIANS owed N$1,8 billion in overdue loans at commercial banks at the end of last year, 15,4 per cent less than they did at the end of June 2011.
The lower interest rate environment, which has been prevailing since 2009, coupled with favourable domestic economic conditions led to the drop, the Bank of Namibia (BoN) said in its latest Financial Stability Report, released last week.’The non-performing loan (NPL) ratio has been falling since March 2009, mainly due to recoveries on mortgage loans in arrears for more than 12 months, as well as payment received on other bad loans and debts written-offs,’ the BoN said. The NPL ratio of the banking sector at the end of December was 1,5 per cent, down from 1,8 per cent at the end of June. This is well below the threshold of four per cent, regarded as the BoN’s ‘early warning system’ for credit risk at commercial banks.’The declining trend in the ratio, which started in the second quarter of 2009, represented a sustained improvement in the banking loan portfolio’s credit risk over the period,’ the BoN said.The better ratio was mainly due to an improvement in non-performing mortgage loans in arrears for more than 12 months, the BoN said.Non-performing mortgage loans fell by 3,2 per cent during the period under review and accounted for nearly 60 per cent of all NPLs.
