Namibia: Banks Thrive As Household Debt Dips

NAMIBIA's banking sector remained resilient in April, with loan quality improving as the share of non-performing loans fell to 4.3%.

Bank of Namibia (BoN) deputy director for financial stability and macroprudential surveillance Anna William revealed this during the technical presentation of the April 2026 Financial Stability Report on Thursday.

William said the decline in the non-performing loan ratio shows the banks are managing credit risk effectively, while clients are also servicing their debt.

She said the banking sector remains profitable, liquid and well-capitalised, with total assets growing by 5.1% to N$188 billion.

Addressing household and corporate debt, William said the central bank's main concern is excessive increases in borrowing.

"If this debt remains high but quite steady, somewhat plateauing, we monitor it. But when we see a spike, an excessive sudden increase, that is a cause for concern," she said.

She said the risks remained unchanged, with the probability of a systemic debt crisis ranging from low to moderate.

The report shows that the household debt-to-disposable income ratio improved to 43.2%, down from 44.7%.

William attributed the improvement to income growth and recent tax relief measures, which helped disposable income outpace the accumulation of new debt.

However, she cautioned that household purchasing power remains under pressure from imported inflation in energy and food.

William also shared the results of stress testing, which simulates adverse economic scenarios to assess how banks would perform during a crisis.

"Our capital adequacy ratio still comes in at 14.7% in the adverse scenario, which is still above the prudential requirement.

This gives us comfort that, from a solvency perspective, the banks are quite well buffered to absorb potential losses," she said.

On the non-banking financial institutions sector, William said assets grew by 16.5% to N$553 billion.

William said retirement funds maintained a funding level of 101%, indicating they have adequate assets to meet liabilities to members.

The presentation concluded that while global geopolitical tensions remain the primary threat to the domestic outlook, Namibia's financial system remains sound, stable and robust. - Nampa

Read the original article on Namibian.