Household credit rose year-on-year and quarter-on-quarter during the second quarter of 2021, driven by a rise in asset-backed credit categories. This is according to the Bank of Namibia’s (BoN’s) quarterly bulletin for the second quarter that shows annual growth in credit extended to households rose to 4% at the end of the second quarter of 2021 from 3.6% recorded a year ago, and 2.6% in the preceding quarter.
“The uptick in growth mainly stemmed from a rise in the asset-backed credit categories, given the low interest rate environment which has provided considerable financial relief to households on long-term loans during these challenging times, particularly with regard to debt servicing during the review period,” reads the report.
After a long period of contraction, instalment sales and leasing credit finally registered positive growth in the second quarter of 2021, while mortgage loans and overdraft credit also increased.
The report noted that credit extended to businesses slowed both on an annual and quarterly basis during the period under review. Year-on-year growth in loans extended to businesses slowed to 1% from 1.7% a year earlier, and 1.2% in the preceding quarter.
“The weakness persisted across most of the credit categories, with lower demand for and repayments of other loans and advances by corporations in the mining, fishing, agriculture and financial services’ sectors playing a prominent role during the quarter under review.
Private sector credit extension (PSCE) maintained the same growth year-on-year at the end of the second quarter of 2021, mainly due to increased demand from households. The annual growth in PSCE stood at 2.8%, largely driven by increased demand from the household sector. Despite positive growth in credit advanced to businesses, growth was held back by weak demand, reflecting the muted level of economic activity during the period under review.
The central bank stated that the growth observed in PSCE is predominantly reflected by a rise in mortgage and overdraft credit during the quarter under review. email@example.com