Credit growth slows down
Total credit extended to the private sector increased by N$173.3 million or 0.2% in December, bringing the cumulative credit outstanding figure to N$85.8 billion.
Annual growth in Private Sector Credit Extended (PSCE) continued to decelerate, coming down to 8.9% compared to the November figure of 9.4%, according to IJG Securities.
“Over the last 12 months a net of N$6.97 billion worth of credit was extended, N$2.56 billion to corporates and N$4.24 billion to individuals, while the non-resident private sector decreased their borrowings by N$28.8 million,” IJG said in its latest assessment. Credit extension to households remained relatively robust, having expanded by 1.2% month-on-month and 9.3% year-on-year in December, however the longer-term trend of slowdown remains intact. The month-on-month increase in credit was largely due to a 1.1% month-on-month increase in mortgage loans and a 3.2% month-on-month increase in overdrafts, amounting to loans of N$374.1 million and N$91.4 million respectively.
Instalment credit to individuals also increased by 0.9% month-on-month or N$69.8 million. On an annual basis mortgage loans have grown 9.5% year-on-year, overdrafts have accelerated to 11.1% year-on-year, and instalment credit has slowed to 8.1% year-on-year, according to IJG.
Said IJG: “The slowdown in household credit is likely to continue as interest rate increases dampen the demand for new debt and low banking sector liquidity suppresses the supply of loans. Instalment credit has been the hardest hit by this squeeze as the demand for capital good such as vehicles has faded. Cumulative 12-month vehicle sales have declined by 21.6% year-on-year.” Looking ahead, IJG said: “Whichever outcome materialises for South Africa, the Bank of Namibia is likely to follow the SARB relatively closely. Any further increases in rates will put further pressure on the consumer which will in turn affect corporates. However, the last round of increases is still filtering its way through the system and thus we expect PSCE growth to continue to slow in the short term, possibly recovering mid-2017.”
STAFF REPORTER
Annual growth in Private Sector Credit Extended (PSCE) continued to decelerate, coming down to 8.9% compared to the November figure of 9.4%, according to IJG Securities.
“Over the last 12 months a net of N$6.97 billion worth of credit was extended, N$2.56 billion to corporates and N$4.24 billion to individuals, while the non-resident private sector decreased their borrowings by N$28.8 million,” IJG said in its latest assessment. Credit extension to households remained relatively robust, having expanded by 1.2% month-on-month and 9.3% year-on-year in December, however the longer-term trend of slowdown remains intact. The month-on-month increase in credit was largely due to a 1.1% month-on-month increase in mortgage loans and a 3.2% month-on-month increase in overdrafts, amounting to loans of N$374.1 million and N$91.4 million respectively.
Instalment credit to individuals also increased by 0.9% month-on-month or N$69.8 million. On an annual basis mortgage loans have grown 9.5% year-on-year, overdrafts have accelerated to 11.1% year-on-year, and instalment credit has slowed to 8.1% year-on-year, according to IJG.
Said IJG: “The slowdown in household credit is likely to continue as interest rate increases dampen the demand for new debt and low banking sector liquidity suppresses the supply of loans. Instalment credit has been the hardest hit by this squeeze as the demand for capital good such as vehicles has faded. Cumulative 12-month vehicle sales have declined by 21.6% year-on-year.” Looking ahead, IJG said: “Whichever outcome materialises for South Africa, the Bank of Namibia is likely to follow the SARB relatively closely. Any further increases in rates will put further pressure on the consumer which will in turn affect corporates. However, the last round of increases is still filtering its way through the system and thus we expect PSCE growth to continue to slow in the short term, possibly recovering mid-2017.”
STAFF REPORTER
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