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Central bank revenues down

Mr Ipumbu Shiimi

Mr Ipumbu Shiimi

The Governor was recently caught between a rock and a hard place as enquiring minds of the media questioned the declined revenue of Bank of Namibia.
For the overall net income, the bank recorded a 5 year low of N$326 million at the end of 2012 as compared to the staggering N$940 million of 2011. Contribution to state thus only amounted to N$ 25 million as compared to 60 million contribution of the previous financial year. According to the income statement, the bank’s malady is a combination of decreased income coupled with increased expenses. Income generated from interest income and net gains from foreign exchange fell by approximately N$74 and N$538 million respectively. Operating expenses for the bank went up by just over 32 million.
The Honourable Governor Mr Ipumbu Shiimi spoke at the official launch of the bank’s annual report to the general public. This yearly event comprises of an overview of the bank’s operations and affairs, an overview of the banking sector and a general comment of the state of the economy.
The bank’s annual financial statements were under much scrutiny by those present. According to the statement released, due to the global economic certainty coupled with the low interest rate environment, the bank’s revenue was adversely affected. On the income side, the Governor explained that international investments have had a dampening effect on the bank’s performance. He stated that the bank looks carefully at countries in Europe before it makes any investment. “If the country has a rating of less than BBB- the bank will not invest there”. He argued that despite this, investments still have to made. Unfortunately, the volatility in the European markets has made it difficult for the bank to receive substantial returns from the said market. “Currently in the European banks, the interest is negative meaning it actually costs the investor to keep his finances in European banks”. He assured the public that the bank was diversifying its portfolio to reduce risk from its future investments and looking into separate markets for sound investment.
On the expenses side, bank operational costs have also gone up as a result of inflationary pressures. According to the Governor, water and utilities increased sharply in 2012. This translated to increased costs incurred by the bank. The bank assured that it hasn’t taken up any additional unnecessary expenses but rather increases value of current costs have been the main issue
The governor also used the opportunity to clarify the bank’s financing from that of government. This was in response to questions about the infamous N$500 million Euro bond issued by the government in October of 2011. He assured that the Euro bond issued by government has no direct impact on the bank’s finances. He stated that the money received from the bond and how it is used has no bearing on the Banks financials but are rather recorded in the Government financial statements.

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