Daily liquidity of commercial banks surges since 9th April
The daily liquidity position of commercial banks has made a dramatic recovery since the upward trend started on 09 April 2020.
Bank liquidity has been weak since December last year, failing to breach the N$1 billion mark for more than a month. Typical daily liquidity stood around N$500 million and on 13 January overall liquidity went negative for the first time in more than two and a half years.
Since 17 January this year, daily liquidity was negative on most trading days for the rest of the month. On 03 February overall liquidity was modestly positive but local liquidity remained negative. By the end of the month, overall liquidity turned negative again, sometimes by close to N$1 billion per day.
Negative liquidity continued during the first half of March, again impacted to a large degree by the lack of liquidity in the local market. It was only by 12 March that banks’ liquidity position turned positive on both their Namibian and their South African assets. As of 13 March the overall liquidity position improved but struggled to stay consistently above N$1 billion.
Liquidity continued to improve during the first week of April, reaching just above N$2 billion on Thursday 09 April but the biggest jump occurred during the Easter Weekend. On Tuesday 14 April, overall liquidity jumped to more than N$3.6 billion and it stayed comfortably above N$4 billion for the remainder of last week.
Meanwhile, the daily liquid asset ratio, a measure of banks’ Tier 1 assets against liabilities, i.e. deposits, which has only been published by the Bank of Namibia since this year, reached a very comfortable 17.91% on 16 April, indicating that local banks are extremely well-capitalised compared to international standards.