The Namibian financial system remains stable, sound and resilient amidst a challenging global and domestic economic environment.
This is according to the Bank of Namibia (BoN) Governor, Johannes !Gawaxab who stated that the total assets for the banking sector grew by 5.3% to N.dollars 173.2 billion in the first quarter of 2023 compared to 17.8% in the last quarter of 2022.
!Gawaxab in a media statement on Tuesday said the assets for the sector were driven by cash and balances at banks, as well as net loans and advances.
“The liquidity ratio of the banking sector stood at 19.1% during the first quarter of 2023, from 17.8% in the last quarter of 2022, due to diamond sales, government spending, capital inflows and subdued private sector credit extension,” he said.
He added that the banking sector maintained adequate capital levels to meet the regulatory requirements and absorb potential losses.
“There was however, a marginal decline in the Return Equity and Return on Asset ratio, indicating reduced profitability due to decrease in both interest and non-interest income earned by the banking sector,” he said.
Contrary to the robust growth of 4.6% observed in 2022, the domestic real Gross Domestic Product (GDP) growth is projected to moderate to 3% in 2023 and is expected to slow down further to 2.9% in 2024.
“Moreover, the assets held by the Non-Bank Financial Institutions (NBFIs) increased by 4.3% on a quarterly basis to N.dollars 381 billion during the first quarter of 2023,” !Gawaxab said.
The increase, he noted was mainly due to growth observed in the long-term insurance and retirement funds sub-sectors.
Retirement Funds (RFs) remained solvent with a funding position at 101.2%, thus remaining above the prudential limit.
“The return on investments of the retirement fund increased to 4.6% in the first quarter of 2023 from 3.9% recorded in the last quarter of 2022, recovering from the bearish first three quarters of 2022,” he said.
– Nampa