Managing checks and balances
As the head of balance sheet management and regulatory reporting at Nedbank Namibia, Penda Amadhila carries a big weight on his shoulders. He spoke to Business7 about his responsibilities, the local banking landscape and the investment environment in the country.
B7: Explain your job in a nutshell.
PA: An integral part of my job is to manage Nedbank Namibia’s liquidity, funding and interest rate risk in the banking book, as well as ensuring effective management to optimise efficiency.
This all needs to happen while remaining within optimal risk management parameters and complying with regulatory requirements.
It is also within my responsibility to assist in delivering Nedbank Namibia’s capital plan, its internal capital adequacy assessment process (ICAAP), as well as the recovery and liquidity plans.
B7: What does an average day at the office entail?
PA: Each day requires me to review the bank’s regulatory report, ensure the maintenance of key behavioural assumptions underpinning liquidity management, as well as oversee the development and maintenance of Nedbank Namibia’s funds.
On a daily basis, I also ensure the limits set on liquidity, interest rate and market risk - which have been set to maximise earnings and return on assets within acceptable levels of risk - are adhered to.
I also assist in the implementation and operation of a framework to manage liquidity and funding risks within the bank, including development of Nedbank Namibia’s ICAAP, funding plan and capital plan.
B7: How would you describe the prevailing banking landscape in Namibia?
PA: It is notable to state that for a developing country, Namibia has a rather sophisticated banking sector, which is comparable to that of any developed country.
However, I believe that one of the key challenges we face as a banking sector is striving towards making the banking sector work for all our citizens. At Nedbank Namibia, we have great regard for our role to accelerate economic growth and provide sustainable access to funding for our clients.
B7: What are the major challenges faced by the industry?
PA: In the last few years the banking sector in Namibia has experienced low growth in advances, coupled with the rising funding costs and lower deposits, which has put a squeeze on margins.
B7: What are the major growth opportunities and how does Nedbank Namibia plan to capitalise on it?
PA: There is still a large population of unbanked individuals in the country.
With the launch of the Nedbank’s ‘Pay As You Use Account’ and new Money App, we aim to attract unbanked customers in the lower income segments, but also those who want to have control of their banking fees.
Digitisation provides us with immense opportunities, and we remain committed to our “digital first, and first in digital” strategies.
B7: Analysts say the consumer is over-indebted and banks are hesitant to lend money because of the high credit risk. What is Nedbank Namibia's view on this?
PA: Before the economy started showing signs of slowing down in the first quarter of 2016, disposable income was rising and naturally this led to consumers borrowing more money.
However, after the last quarter of 2016, things became challenging as the economy started slowing down to a point where the economic headwinds are quite challenging to negotiate and overcome. Due to this disposable incomes started falling, making it difficult for consumers to service their debt.
Therefore, banks have the responsibility to ensure the safety of depositors’ money as those are the funds which are used to lend out to customers.
It remains of utmost importance for any bank to ensure that when it lends out money, it can be paid back. It is therefore a given that during a downturn of the economy, banks will be more cautious when lending out money, as the probability of loan repayment is lower.
B7: Business sentiment has been low and was reflected in lower credit extension figures over the past few years. Does Nedbank Namibia expect a huge change?
PA: Business sentiment has been low due to the recessionary environment we are unfortunately experiencing in the country.
Economies go through cycles of growth and recession. It is the hope that the economy will soon recover from the current downturn. The recent good rains can have a positive effect on the economy.
However, to really accelerate growth in the country there are some fundamental issues that must be addressed. These issues are not unlike those experienced by other growing economies in the world, and there is a universal reality for all such countries: We need to continue reforming inefficient SOEs, control government spending and debt, as well as make Namibia an attractive investment destination.
B7: How does Nedbank Namibia view the investment environment in the country?
PA: Namibia is a country with immense opportunity.
However, there are some structural issues which need to be dealt with and unfortunately for a number of these structural problems, some brave decisions will need to be made from a political point of view. Such decisions are never easy to implement.
For example, public debt as a percentage of gross domestic product (GDP) is over 40%. This indicates that government makes up a large part of the economy which in many cases is not ideal.
As a consequence, a larger space for the private sector needs to be created, and government will have to reform the economy by scaling back which will provide a catalytic impetus for the private sector to then take the lead in growing the economy.
PA: An integral part of my job is to manage Nedbank Namibia’s liquidity, funding and interest rate risk in the banking book, as well as ensuring effective management to optimise efficiency.
This all needs to happen while remaining within optimal risk management parameters and complying with regulatory requirements.
It is also within my responsibility to assist in delivering Nedbank Namibia’s capital plan, its internal capital adequacy assessment process (ICAAP), as well as the recovery and liquidity plans.
B7: What does an average day at the office entail?
PA: Each day requires me to review the bank’s regulatory report, ensure the maintenance of key behavioural assumptions underpinning liquidity management, as well as oversee the development and maintenance of Nedbank Namibia’s funds.
On a daily basis, I also ensure the limits set on liquidity, interest rate and market risk - which have been set to maximise earnings and return on assets within acceptable levels of risk - are adhered to.
I also assist in the implementation and operation of a framework to manage liquidity and funding risks within the bank, including development of Nedbank Namibia’s ICAAP, funding plan and capital plan.
B7: How would you describe the prevailing banking landscape in Namibia?
PA: It is notable to state that for a developing country, Namibia has a rather sophisticated banking sector, which is comparable to that of any developed country.
However, I believe that one of the key challenges we face as a banking sector is striving towards making the banking sector work for all our citizens. At Nedbank Namibia, we have great regard for our role to accelerate economic growth and provide sustainable access to funding for our clients.
B7: What are the major challenges faced by the industry?
PA: In the last few years the banking sector in Namibia has experienced low growth in advances, coupled with the rising funding costs and lower deposits, which has put a squeeze on margins.
B7: What are the major growth opportunities and how does Nedbank Namibia plan to capitalise on it?
PA: There is still a large population of unbanked individuals in the country.
With the launch of the Nedbank’s ‘Pay As You Use Account’ and new Money App, we aim to attract unbanked customers in the lower income segments, but also those who want to have control of their banking fees.
Digitisation provides us with immense opportunities, and we remain committed to our “digital first, and first in digital” strategies.
B7: Analysts say the consumer is over-indebted and banks are hesitant to lend money because of the high credit risk. What is Nedbank Namibia's view on this?
PA: Before the economy started showing signs of slowing down in the first quarter of 2016, disposable income was rising and naturally this led to consumers borrowing more money.
However, after the last quarter of 2016, things became challenging as the economy started slowing down to a point where the economic headwinds are quite challenging to negotiate and overcome. Due to this disposable incomes started falling, making it difficult for consumers to service their debt.
Therefore, banks have the responsibility to ensure the safety of depositors’ money as those are the funds which are used to lend out to customers.
It remains of utmost importance for any bank to ensure that when it lends out money, it can be paid back. It is therefore a given that during a downturn of the economy, banks will be more cautious when lending out money, as the probability of loan repayment is lower.
B7: Business sentiment has been low and was reflected in lower credit extension figures over the past few years. Does Nedbank Namibia expect a huge change?
PA: Business sentiment has been low due to the recessionary environment we are unfortunately experiencing in the country.
Economies go through cycles of growth and recession. It is the hope that the economy will soon recover from the current downturn. The recent good rains can have a positive effect on the economy.
However, to really accelerate growth in the country there are some fundamental issues that must be addressed. These issues are not unlike those experienced by other growing economies in the world, and there is a universal reality for all such countries: We need to continue reforming inefficient SOEs, control government spending and debt, as well as make Namibia an attractive investment destination.
B7: How does Nedbank Namibia view the investment environment in the country?
PA: Namibia is a country with immense opportunity.
However, there are some structural issues which need to be dealt with and unfortunately for a number of these structural problems, some brave decisions will need to be made from a political point of view. Such decisions are never easy to implement.
For example, public debt as a percentage of gross domestic product (GDP) is over 40%. This indicates that government makes up a large part of the economy which in many cases is not ideal.
As a consequence, a larger space for the private sector needs to be created, and government will have to reform the economy by scaling back which will provide a catalytic impetus for the private sector to then take the lead in growing the economy.
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