CREDIT extended to the private sector increased by N$402,2 million or 0,7% in August 2013 to reach N$55,8 billion, IJG Securities says in its latest commentary citing Bank of Namibia figures.
On an annual basis, Private Sector Credit Extension (PSCE) growth eased further at the end of August, increasing 13,8% after the previous month's increase of 14,8%, with total credit outstanding N$6,8 billion more than a year ago.
IJG said the monthly increase in PSCE was driven by higher borrowing from individuals, slightly offset by a lower demand for credit from the corporate side.
"With the exception of "other loans and advances", growth in all credit categories rose at the end of August 2013, contributing to the overall increase in PSCE. The split between business and private credit in total debt outstanding is 38,5% to 61,5%.
On an annual basis growth in corporate credit eased to 12,6% in August from 15,4% previously due to another drop in corporate overdrafts to -2,2% year on year from +4,5% in July. Growth in "other loans and advances" fell to 17,5% year on year on account of a significant of three percent month on month, while mortgage loans increased further to 17,9% from 16,9% recorded previously.
IJG said N$427,2 million in credit was advanced to individuals during August, bringing total credit extended to individuals to N$34,5 billion. Foreign reserves decreased by 18,1% month on month to N$14,8 billion n at the end of August after increasing 12,9% in July. The decrease in the reserve holding is attributed to net commercial banks purchases of rand, government and Bank of Namibia payments abroad during August.
"Looking forward we expect credit growth to continue the strong upward trend for the remaining part of the year and 2014 as the recent tax breaks that came into affect and the all time low interest rates bodes well for credit growth," IJG said.