CORPORATES and individuals plunged themselves deeper into dept in September, borrowing N$1,2 billion in total, and driving up annual growth in private sector credit extension (PSCE) to its highest level in six years.
The bulk of the credit, N$673 million, went to individuals. Of this, N$589 million was for mortgage loans.
PSCE growth increased to 15,5% annually from 14,2% in August and 13,3% in July, Simonis Storm Securities (SSS) analyst Rudolf Kuschke said.
Overdrafts to individuals showed “strong growth” in September, increasing 21,3% year-on-year. Mortgages to individuals grew by 12,7% on an annual basis, the highest since August 2008, Kuschke said.
On the corporate side, overdrafts increased by N$57 million during September, driving annual growth from 10,3% in August to 15,5%. “This is the third month of year-on-year growth after ten consecutive months of annual decreases in the category,” Kuschke said.
Mortgage growth also increased to 21% on an annual basis with N$224 million in total granted to business during the month.
“According to BoN [Bank of Namibia], companies in the transport sector were the main drivers behind overdraft growth, while construction companies were the biggest contributor to mortgage growth,” Kuschke said.
The trend of rising credit extensions is expected to continue on a broader level with the festive season approaching and interest rates low, he said.
“Although, we anticipate total credit extensions to continue gathering pace, we foresee overdrafts for corporates and households to lead. Amongst the two classes of consumers, overdrafts to individuals could start becoming more pronounced,” Kuschke said.