Monitoring of inflationary pressures crucial
Risks to the financial system
The Namibian financial system remains stable, sound and resilient.
The inflationary pressures which emanated from geopolitical tensions requires close monitoring as it could undermine the economic recovery and negatively impact the health of the financial system.
The latest inflation figures by the Namibia Statistics Agency (NSA) indicated that inflation came in at 7.1% in October 2022. Year to date, inflation averaged 5.9%.
Despite the vulnerabilities, the Macroprudential Oversight Committee (MOC) of the Bank of Namibia is of the view that the domestic financial system remains stable, robust and resilient.
Therefore, there is no need for macroprudential policy intervention at this stage, the central bank said in a statement.
The banking sector remains liquid, profitable and adequately capitalised, although not performing at pre-covid levels. Growth in the total assets of the banking sector rose by 10.7% to reach N$161.4 billion at the end of September 2022. Further, the banking sector maintained adequate capital levels to meet the regulatory requirements and to absorb potential losses. The non-performing loans (NPL) ratio has improved, declining further by 0.4 percentage points to 5.7% during the third quarter of 2022.
The Non-Bank Financial Institutions (NBFI) sector growth slowed during the review period but remained profitable and sufficiently capitalised. Over the third quarter of 2022, NBFI assets grew marginally by 0.8% year-on-year to N$356.9 billion. This was the slowest annual growth since the first quarter of 2020. The slower annual growth in NBFI’s assets as at the third quarter of 2022 is as a result of the effects of high inflation, recessionary pressures, and the geopolitical tension in Europe which lead to unfavourable developments in the financial markets, BoN said.
The latest inflation figures by the Namibia Statistics Agency (NSA) indicated that inflation came in at 7.1% in October 2022. Year to date, inflation averaged 5.9%.
Despite the vulnerabilities, the Macroprudential Oversight Committee (MOC) of the Bank of Namibia is of the view that the domestic financial system remains stable, robust and resilient.
Therefore, there is no need for macroprudential policy intervention at this stage, the central bank said in a statement.
The banking sector remains liquid, profitable and adequately capitalised, although not performing at pre-covid levels. Growth in the total assets of the banking sector rose by 10.7% to reach N$161.4 billion at the end of September 2022. Further, the banking sector maintained adequate capital levels to meet the regulatory requirements and to absorb potential losses. The non-performing loans (NPL) ratio has improved, declining further by 0.4 percentage points to 5.7% during the third quarter of 2022.
The Non-Bank Financial Institutions (NBFI) sector growth slowed during the review period but remained profitable and sufficiently capitalised. Over the third quarter of 2022, NBFI assets grew marginally by 0.8% year-on-year to N$356.9 billion. This was the slowest annual growth since the first quarter of 2020. The slower annual growth in NBFI’s assets as at the third quarter of 2022 is as a result of the effects of high inflation, recessionary pressures, and the geopolitical tension in Europe which lead to unfavourable developments in the financial markets, BoN said.
Comments
Namibian Sun
No comments have been left on this article