Growth in credit to private sector decelerates
Credit extended to the private sector eased to a 11-month low of 9.8% in December 2011, latest statistics from the central bank shows.
The slowdown in growth, according to Simonis Storm Securities, is partly a function of a high base as PSCE increased a significant 2.3% on a monthly basis in December 2010.
But despite the decline in private sector credit, growth in total credit extended continued to accelerate on a monthly basis in December 2011, increasing N$687 million or 1.6% to N$44.3 billion compared to growth of 1.3% (N$558 million), 0.6% (N$237million) and 0.4% (N$168 million) in November, October and September, respectively. The slowdown was mainly a result of significantly slower growth in the corporate sector, with corporate credit growth easing from 8.8% in November to 5.8% in December, the lowest level in six years. This was on the back of a steep contraction in business overdrafts, declining 20.6% year-on-year. The corporate sector represents approximately 36% of total credit.
On the other hand, credit extended to individuals remained resilient, with the rate of growth increasing to 12.3%. Individual credit growth was driven by strong mortgage lending as well as installment credit. Individual mortgages grew by 11.6% while installment credit growth remained very strong at 21.8% – not surprising after the strong new vehicle sales witnessed in recent months. Foreign reserves declined by 3.7% in December after jumping 25.8% month-on-month in November. On an annual basis, foreign reserves are 41.1% higher, reflecting the Eurobond proceeds.
Domestic Government debt issuance continued its rapid increase to N$16.5 billion in January, a year-on-year increase of 61.6% while the portion of debt that matures in less than a year decreased slightly to 56.8%.