Namibian financial system stable, sound and resilient
The Macro prudential Oversight Committee of the Bank of Namibia concluded that the financial system is stable, resilient and sound despite prevailing risks and vulnerabilities. Therefore, there is no need for further macro prudential policy intervention at this stage.According to the central bank’s deputy governor Ebson Uanguta, the banking and non-bank financial industries continued to perform adequately and remained profitable during the first half of 2022. The banking industry expanded its balance sheet and remains liquid, profitable, and well capitalised, while the non-bank financial industry is reporting funding and solvency positions above the prudential limits. The domestic economy is expected to improve in 2022 and 2023, albeit at a slower pace than previously anticipated. The resilience of the domestic financial system has enabled it to withstand the impact of geopolitical tensions, inflationary pressures, tightening monetary policies and Covid-19.
Banking sector assets maintained positive growth during the first half of 2022. Growth in banking sector assets continued to recover from the lows experienced in the second quarter of 2020 at the peak of the pandemic.
In addition, Namibia’s payment system and infrastructure remained stable and efficient. The payment system has been operating effectively and efficiently during the first half of 2022, with financial market infrastructures such as the Namibia Inter-Bank Settlement System (NISS) and Namclear operating optimally, he added.
Moreover, the Non-Bank Financial Institutions (NBFI’s) remained stable, profitable and sufficiently capitalised. NBFI assets expanded year-on-year, attributable to a combination of new business and positive returns on investment, despite a marginal decline on a quarterly basis.
Lastly, the inflation developments are supply-side driven with a significant portion being imported. Notable relief measures to date include the recently announced reduction in petrol and diesel prices by the Ministry of Mines and Energy. A continued rise in inflation could impact the performance of the financial system, and as such the central bank will continue to monitor these developments and adopt appropriate measures, Uanguta said.