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Wednesday 16 January 2019
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Commercial banks’ liquidity decline by N$700m

The overall liquidity position stood at N$1.4 billion at the end of March 2017 compared to N$2.1 billion at the end of February 2017, official figures from the central bank indicate. According to Bank of Namibia’s Money and Banking statistics for March 2017, the decline in liquidity resulted from the cross-border payments for foreign transactions and dividend/profit paid to foreign parent companies from their Namibian subsidiaries. The report says annual growth in private sector credit extended (PSCE) slowed at the end of March percent 2017.“Annual growth slowed to 8.6 percent at the end of March 2017 from 9.1 percent at the end of February 2017. The decline was mainly driven by the decrease in the demand for credit by both the household and corporate sectors,” indicated the report.

The slower growth in PSCE, according to BoN, was mainly reflected in the decreased demand for credit by the corporate sector during the review period. “Total PSCE in nominal terms remained at N$86.8 billion at the end of March 2017, similar to February 2017. The slowdown in annual growth can be attributed to all credit categories except other loans and advances as well as overdrafts, which rose during the period under review.” There was also an increase in total credit extended to businesses slowed at the end of March 2017.  “The 12-month growth in total credit extended to businesses stood at 8.4 percent at the end of March 2017. This is evident in the slower growth of most major credit categories except other loans and advances and overdrafts, which rose.” Similarly, growth in credit extended to individuals slowed at the end of March 2017.

The annual growth in total credit extended to individuals stood at 8.8 percent, which was 0.4 percentage point lower than the 9.2 percent in February 2017. The slow down in credit extended to individuals, BoN said, was primarily reflected in overdrafts, which decreased from 15.4 percent to 11.3 percent. “The moderation is evident in all major credit categories.” The growth in overdraft credit also rose on an annual basis at the end of March 2017. “The annual growth in overdraft credit rose moderately to 13.9 percent at the end of March 2017, compared to 13.1 percent growth at the end of February 2017. The higher growth was mainly driven by the base effects, from the corporate sector,” said BoN. Annual growth in other loans and advances such as personal loans and credit cards also increased last month when compared to the preceding month. “Annual growth in other loans and advances, which represents about 11.5 percent of total credit to the private sector, rose to 16.8 percent at the end of March 2017, an increase of 1.2 percentage points, when compared to the previous month. The higher growth during the review period was mainly driven by base effects.”

BoN also indicated that the stock of foreign reserves declined at the end of March. The level of international reserves declined slightly to N$22.6 billion at the end of March, compared to N$22.7 billion in February. “The decline in the level of reserves during the month under review emanated mainly from decreased net purchases of Rand by commercial banks, geared towards investments and payments to non-residents.”




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