‘Credit keeping the lights on’
The corporate sector has to rely on especially personal loans, term loans and credit cards to keep the cash flowing.
Jo-Maré Duddy – The total short-term debt of Namibia’s business and corporate sector has ballooned by nearly N$1.4 billion in a year to reach about N$16.2 billion at the end of September.
Loans and other advances, which comprises of credit card debt, personal and term loans, continued the double-digit growth started in March last year. According to the Bank of Namibia’s latest figures, loans and advances grew by 16% on an annualised basis in September. It has shot up by N$935.7 million in a year and totalled nearly N$6.8 billion at the end of September.
The sector’s total overdraft debt in the month under review stood at nearly N%9.5 billion – N$459.7 million or 5.1% more than September 2018.
In total, the sector owed local commercial banks nearly N$40.7 billion at the end of September this year, up nearly N$2.4 billion or 6.2% compared to a year ago. In September 2018, short-term credit made up nearly 38.8% of total corporate debt. A year later, the figure is about 39.9%.
Commenting on the latest data, IJG Securities said “corporates continue to rely on short-term debt to keep the lights on instead of taking on longer-term credit to invest in capital projects to expand operations”.
The sector’s total mortgage debt at the end of September was nearly N$12.2 billion. It has grown by only N$568.2 million or 4.9% over the year.
Overall credit extended to corporates in September grew by 6.2% year on year.
Consumer
Households owed local commercial banks nearly N$59.8 billion in total at the end of the month. Compared to September 2018, this is an increase of nearly N$3.8 billion or 6.8%.
Consumers’ personal loans and credit card debt rose by about N$1.4 billion or 23.1% during the year under review and totalled nearly N$7.7 billion. Overdrafts increased by N$337 million or 11% to some N$3.4 billion.
Mortgage debt was up nearly N$2.6 billion or 6.7% to around N$40.7 billion.
IJG commented that total private sector credit extension (PSCE) – corporates and households - continued to languish, increasing by 6.2% year on year during September.
“It has been 35 months since PSCE last recorded double digit growth. As expected, the 25-basis point rate cut in August has not resulted in higher demand for credit, as consumers are already over-indebted and growth opportunities for businesses are few due to a lack of demand,” IJG said.
Simonis Storm said they expect credit demand to remain “lacklustre for the remainder of the year as economic conditions worsen and confidence deteriorates further”.
Loans and other advances, which comprises of credit card debt, personal and term loans, continued the double-digit growth started in March last year. According to the Bank of Namibia’s latest figures, loans and advances grew by 16% on an annualised basis in September. It has shot up by N$935.7 million in a year and totalled nearly N$6.8 billion at the end of September.
The sector’s total overdraft debt in the month under review stood at nearly N%9.5 billion – N$459.7 million or 5.1% more than September 2018.
In total, the sector owed local commercial banks nearly N$40.7 billion at the end of September this year, up nearly N$2.4 billion or 6.2% compared to a year ago. In September 2018, short-term credit made up nearly 38.8% of total corporate debt. A year later, the figure is about 39.9%.
Commenting on the latest data, IJG Securities said “corporates continue to rely on short-term debt to keep the lights on instead of taking on longer-term credit to invest in capital projects to expand operations”.
The sector’s total mortgage debt at the end of September was nearly N$12.2 billion. It has grown by only N$568.2 million or 4.9% over the year.
Overall credit extended to corporates in September grew by 6.2% year on year.
Consumer
Households owed local commercial banks nearly N$59.8 billion in total at the end of the month. Compared to September 2018, this is an increase of nearly N$3.8 billion or 6.8%.
Consumers’ personal loans and credit card debt rose by about N$1.4 billion or 23.1% during the year under review and totalled nearly N$7.7 billion. Overdrafts increased by N$337 million or 11% to some N$3.4 billion.
Mortgage debt was up nearly N$2.6 billion or 6.7% to around N$40.7 billion.
IJG commented that total private sector credit extension (PSCE) – corporates and households - continued to languish, increasing by 6.2% year on year during September.
“It has been 35 months since PSCE last recorded double digit growth. As expected, the 25-basis point rate cut in August has not resulted in higher demand for credit, as consumers are already over-indebted and growth opportunities for businesses are few due to a lack of demand,” IJG said.
Simonis Storm said they expect credit demand to remain “lacklustre for the remainder of the year as economic conditions worsen and confidence deteriorates further”.
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