More than N$10 bn in debt holidays

The average lending rate in Namibia last year decreased from 9.83% to 6.92%.

05 May 2021 | Economics

This significant decrease in the repo rate had several effects on the economy and the banking sector’s income. – Bank of Namibia

Jo-Maré Duddy – Commercials banks last year granted clients severely impacted by the Covid-19 pandemic debt relief to the tune of N$10.3 billion in total.

About N$4.5 billion or 44% of this was relief to individuals, according to the Bank of Namibia’s (BoN) Financial Stability Report (FSR) released last week.

Most of the relief – N$4.7 billion or 46% - was granted for a period of one to three months. Nearly 19% of holidays were granted for four to six months, while 4% was applicable for seven to 12 months.

In April last year, the BoN implemented debt relief measures which allowed commercial banks to provide clients a repayment holiday on the principal amount for a period ranging from 6 months to 24 months based on thorough assessment of economic and financial condition of individual borrowers.

In terms of the measures, interest may be capitalised, on condition that a reduced interest rate shall apply during the repayment holiday period.

INTEREST RATES

The central bank in 2020 dropped its repo rate by 275 basis points from 6.5% at the beginning of 2020 to 3.75% at present to provide relief to the domestic economy. That caused the prime lending rate to fall from 10.25% to 7.5% with a year.

“Servicing mortgages and other loan products became cheaper for households, and commercial banks were able to, in turn, borrow from the Bank of Namibia at cheaper rates. This helped alleviate the debt burden, effectively relieving the pressure on households and businesses,” the central bank said.

According to the FSR, the average lending rate in Namibia decreased from 9.83% to 6.92% during the 12 months under review – a tumble of 291 basis points. In comparison, the average lending rate in South Africa was reduced by 246 basis points from 10.49% to 8.03%.

BANKS

This significant decrease in the repo rate had several effects on the economy and the banking sector’s income, the BoN said.

The sector’s total income declined by 3.1% year-on-year (y/y), from N$10.4 billion to N$10 billion, compared to growth of 7.7% reported during the previous year. Total income was largely comprised of net interest income that decreased by N$446.9 million to N$5.5 billion due to the lower interest rate environment, the BoN said in its Annual Report 2020.

After-tax profits contracted by 33.4% during 2020, down from N$2.7 billion to N$1.8 billion.

“This represents a weaker performance when compared to growth of 5.9% reported in 2019. The contraction in earnings was fuelled by impairment charges that surged by 106.1% from N$726.7 million to N$1.5 billion due to the weaker macroeconomic conditions that negatively impacted the quality of the banking sector loan book,” the BoN said.

Similar News

 

Catastrophe could have been prevented

2 days ago - 14 May 2021 | Economics

Robin Millard - The catastrophic scale of the Covid-19 pandemic could have been prevented, an independent global panel concluded Wednesday, but a "toxic cocktail" of...

Nam secures green loan from Germany

2 days ago - 14 May 2021 | Economics

Staff Reporter – The 100-million-euro loan agreement signed by finance minister Iipumbu Shiimi and German ambassador Herbert Beck this week will fund crucial water and...

Banning subsidies that lead to over-fishing

2 days ago - 14 May 2021 | Economics

Geneva - After two decades of talks at the World Trade Organisation towards banning subsidies that contribute to over-fishing, the lead negotiator this week said...

Africa Briefs

4 days ago - 12 May 2021 | Economics

Zambia: Progress with bail-out loan programmeZambia's finance ministry said it had reached a broad agreement with the International Monetary Fund (IMF) on macroeconomic parameters, fiscal...

Nampa loses millions in 2019

5 days ago - 11 May 2021 | Economics

State-owned Namibia Press Agency (Nampa) made a comprehensive loss of nearly N$7.7 during the 2018/19 financial year, Auditor General (AG) Junias Kandjeke has found.In 2017/18,...

Rand hits 16-month high

5 days ago - 11 May 2021 | Economics

Emerging market currencies hovered around record-high levels yesterday as weak US jobs data kept the dollar under pressure, while South Africa's rand rose to a...

Africa Briefs

5 days ago - 11 May 2021 | Economics

Ghana to create more jobsThe Ghanaian government will speed up the implementation of its proposed jobs and skills programme to promote skill development and offer...

G7 should invest trillions in green recovery

5 days ago - 11 May 2021 | Economics

Guy Faulconbridge - G7 countries should invest US$10 trillion to stoke an investment-driven recovery that puts Covid-19 vaccines in arms and triggers a sweeping energy...

Massive increase in labour complaints

6 days ago - 10 May 2021 | Economics

The ministry of labour, industrial relations and employment creation in the 2020/21 financial year facilitated payments amounting to more than N$1.8 million on behalf of...

Africa urges patience on vaccine patent waiver

6 days ago - 10 May 2021 | Economics

NAIROBI - The African Union's health agency has welcomed US president Joe Biden's decision to waive intellectual property rights for Covis-19 vaccines, but counselled patience...

Latest News

Millions invested in Safari Hotels

2 days ago - 14 May 2021 | Business

Jo-Maré Duddy – Following failed plans to merge with United Africa Group (UAG), Safari Hotels and Conference Centre announced that it has been acquired by...

Deep Yellow appoints ex-Rössing boss

2 days ago - 14 May 2021 | Business

Jo-Maré Duddy – Deep Yellow, owner of Reptile Uranium Namibia, has appointed Chris Salisbury, a former managing director of Rössing, as its chairperson.The Australia-based company...

A new energy to August...

2 days ago - 14 May 2021 | People

Monique AdamsBorn and raised in Katutura, Hangula attended Mandume Junior Primary School, then Namutoni Senior primary school and A. Shipena Secondary School.She recalls not being...

HR is the backbone of...

2 days ago - 14 May 2021 | Others

Frans ShilongoOrganisations cannot function properly without HR. HR is the custodian of the organisation’s policy and staff rules which maintain orderly conduct. It is the...

Certified ghetto lovers

2 days ago - 14 May 2021 | Art and Entertainment

MICHAEL KAYUNDE WINDHOEK With the release of their joint album ‘Ghetto Love’...

Catastrophe could have been prevented

2 days ago - 14 May 2021 | Economics

Robin Millard - The catastrophic scale of the Covid-19 pandemic could have been prevented, an independent global panel concluded Wednesday, but a "toxic cocktail" of...

EDITORIAL

2 days ago - 14 May 2021 | Opinion

The lethargic and lackadaisical manner in which the Namibian government is dealing with the abuse meted out against Namibians in the Zambezi Region by the...

Chrissla Essentials - a local...

2 days ago - 14 May 2021 | Others

Hinauarue Rijatua MiLash Cosmetics - that would eventually blossom into what is now known as Chrissla Essentials Cosmetics CC - made its debut in...

An undying passion for numbers

2 days ago - 14 May 2021 | People

Michelline NawatisesPolicia Stefanie Mostert (nee Groenewaldt) was born and raised in Rehoboth. She attended Origo Primary School and Dr Lemmer High School. She attained a...

Load More