Private sector credit increases in July
Normalised private sector credit has steadily been ticking up from the lows of 2021, rising by N$342.9 million in July.
According to the Bank of Namibia, this brings the cumulative credit outstanding to N$116.2 billion. On a year-on-year basis, private sector credit grew by 10.6% annually.
The central bank states that claims on non-resident private sectors have taken up the bulk of the issuance with debts over the past 12 months summing to N$6.97 billion or 63% of the total debt issuance, followed by corporates which took up N$2.84 billion (or 26%) and individuals at N$1.32 billion (12%).
With economic activity expected to remain relatively muted over the short- to medium-term, IJG does not expect to see drastic increases in PSCE growth soon.
“Ultra-accommodative interest rates over the past two years provided relief to indebted consumers, but did not stimulate credit uptake, as evidenced by the low PSCE growth figures since the start of the Covid-19 pandemic when the central bank aggressively cut rates,” IJG said.
The firm notes that even with another 75 – 100 basis point increases, local interest rates will still be accommodative by historical standards.
“We could possibly see commercial banks being more willing to extend credit in the rising interest rate environment as they experience margin expansion, provided that they do not expect non-performing loans to increase,” IJG added.