Capricorn tops in PSG Konsult banking review

Capricorn Group Limited (CGL) received top spot in the 12th edition of PSG Konsult’s banking review, topping Namibia’s biggest bank FNB, as well as Standard Bank and Nedbank, who made up second, third and fourth position respectively.

Capricorn Group Limited, the owner of Bank Windhoek, was able to achieve the spot based on profitability and credit risk metrics, PSG said.

“CGP outperformed its peers in profitability and credit risk, reporting the highest non-interest revenue (NIR) growth, the largest market share in advances, and the lowest credit risk. FNB led in the advances and cost efficiency categories, while Standard Bank Namibia excelled in dividends and capital adequacy ratings.

Measuring other metrics, PSG said Namibian banks had also seen improvements in how much profit they were able to generate off of their assets and net income.

“Namibian banks’ net interest income has been boosted by elevated interest rates the past two years leading to increased profitability,rising net interest margins and improvements in return on assets (ROA) and return on equity (ROE),” PSG said.

FNB remained Namibia’s biggest bank by market share for a third consecutive year, according to PSG.

“Namibian bank’s assets make up 75.5% of Namibia’s GDP measured at 30 June 2024. Total banking assets grew at a pace of 4.9% (year-on-year) y/y compared to the previous year’s 6.3%, with FNB claiming the largest market share in terms of total assets for the third consecutive year,” it said.

Advances by banks had not returned to pre-Covid times, PSG found, while CGL was found to have extended the most advances among its banking peers.

“Advances growth has picked up pace over the past year, although it remains lower compared to pre-2020 levels. FNB recorded the highest growth in gross advances at 7.2% y/y, while CGP continues to hold the largest market share at 35.8% among Namibian banking groups,” PSG said.

“On average, Namibian banks' total loan book grew by 4.2% y/y as compared to June 2023, when it grew to 3.3% y/y, with the highest growth observed in instalment sales and leases over the past year,” it added.

However, deposit growth rates in the banking sector have slowed compared to the last decade, primarily due to higher interest rates and inflation, which have reduced consumers' disposable income and ability to save. This, combined with economic pressures, has resulted in increased credit risk for most banks.

Namibian banks were lauded for displaying what PSG termed resilience by enhancing their cost structures.

“Namibian banking groups have demonstrated resilience by enhancing their cost efficiency, despite the challenges posed by high inflation, increased staff costs, and significant investments in technological advancements and compliance-related costs,” PSG said.

“This was effectively offset by the rise in interest rates boosting profit margins. Despite slower deposit uptake Namibian banking groups have maintained and improved liquidity in compliance with Basel III and Namibia’s Banking Institutions Act, 2023, which increased capital requirements and introduced more stringent liquidity and governance standards. All banks remain well capitalised above minimum requirements,” it added.