BoN mulling extra capital buffer for banks

The Bank of Namibia (BoN) is exploring the implementation of a countercyclical capital buffer (CCyB) as an additional layer of resilience for the banking sector, the governor of the central bank, Johannes !Gawaxab, has said.This follows after the last meeting of the BoN’s Macroprudential Oversight Committee (MOC) to assess potential risks and vulnerabilities in the Namibian financial system.A CCyB is a capital requirement that banks need to build during economic expansion, which is witnessed by periods when credit is growing rapidly, on top of the existing capital adequacy requirements, !Gawaxab said in a statement yesterday. “This buffer can be released during economic downturns to cover credit losses or to lend to the real economy without the banking sector’s resilience being jeopardised,” he added.The BoN will commence consultations with the industry on the implementation of the CCyB in Namibia, !Gawaxab said.According to the MOC, Namibia’s financial system continues to display resilience despite the current macroeconomic conditions. The committee therefore determined that no further macroprudential policy intervention is required at this stage. The BoN will, however, continue to monitor the developments and when warranted, take the necessary remedial macroprudential action with the tools at its disposal, !Gawaxab said.SoundIn the past quarter, the banking sector continued to demonstrate strong balance sheet growth, driven by enhanced liquidity and solid capital levels, !Gawaxab said.Total assets for the sector experienced a 1.5% increase, reaching N$174.6 billion on a quarterly basis. This growth was primarily attributed to rises in cash and balances at banks, short-term negotiable securities, and net loans and advances.The liquidity ratio of the banking sector rose to 18.5%, compared to 18.1% in the previous quarter. The increase was fuelled by higher diamond sales and government payments, leading to augmented cash balances. The sector maintained satisfactory capital levels, ensuring compliance with regulatory requirements and the capacity to absorb potential losses, !Gawaxab said.Both the return on equity and return on asset ratios experienced an uptick, driven by the banking sector's increased net-interest income. Although there was a slight deterioration in asset quality, it remained below the supervisory intervention trigger point of 6%.“Going forward, the pressure on households and businesses due to higher interest rates and slow economic growth could further deteriorate asset quality,” !Gawaxab said.

BoN mulling extra capital buffer for banks

Comments

Namibian Sun 2026-09-17

Please login to leave a comment

BoN mulling extra capital buffer for banks

Comments

Namibian Sun 2026-09-17

Please login to leave a comment

Subscription Required to Access Content ×

Login

Subscription Required to Access Content