Financial stability sound
Household indebtedness and corporate sector exposure to foreign debt were the two main risk factors to Namibia’s financial system in 2015.
This is according to the latest national financial stability report released by the Bank of Namibia (Bon) and the Namibia Financial Institutions Supervisory Authority (Namfisa), yesterday.
The country’s banking and non-banking financial sectors remained sound, profitable and adequately capitalised throughout last year, Bon Deputy Governor Ebson Uanguta told members of the media, at the launch of the report.
A slowdown in China’s economy, and declining uranium, copper and zinc prices posed potential negative power over the national economy, Uanguta said, having led to increased uncertainty and weakening growth prospects for most of the globe.
“The overall assessment concludes that the financial sector is robust, healthy and resilient to shocks, but continuous monitoring of risks to financial stability from the domestic, regional and global environment is needed as a prudential measure” Uanguta said.
Since the last year’s report, he said the ratio of household debt, driven by mortgages and other loans and advances, had risen, growing from a ratio of 89.1% at December 2015, compared to 85.5% in December 2014.
“The trend in household debt will be closely examined and suitable policy measures will be effected to keep its growth rate at sustainable levels,” the Bon Deputy Governor said.
Corporate debt levels also grew during the period under review, with both foreign and domestic private sector debt showing an upsurge.
These high levels, he added, were ascribed to borrowing by both local and multinational enterprises to expand their operations.
Since credit extended to businesses was used for productive activities however, he said this was not considered a major risk to financial stability.
“Similarly, the acceleration in the growth rate of large exposures in the banking sectors, to sectors such as manufacturing and construction, does not pose a major risk to the financial system,” Uanguta said.
The annual financial stability reports is aimed at identifying risks and vulnerabilities in the national financial system and assess the system’s resilience to both domestic and international shocks.
As such, Uanguta said an analysis of critical incidents which could occur and impact the stability of the national payment system, was also performed.
This analysis, he said, informed the researchers on ways to prevent such incidents, including though techniques to improve operational controls. The full report can be accessed via either the Bon or Namfisa websites, www.bon.com.na and www.namfisa.com.na
DENVER ISAACS
This is according to the latest national financial stability report released by the Bank of Namibia (Bon) and the Namibia Financial Institutions Supervisory Authority (Namfisa), yesterday.
The country’s banking and non-banking financial sectors remained sound, profitable and adequately capitalised throughout last year, Bon Deputy Governor Ebson Uanguta told members of the media, at the launch of the report.
A slowdown in China’s economy, and declining uranium, copper and zinc prices posed potential negative power over the national economy, Uanguta said, having led to increased uncertainty and weakening growth prospects for most of the globe.
“The overall assessment concludes that the financial sector is robust, healthy and resilient to shocks, but continuous monitoring of risks to financial stability from the domestic, regional and global environment is needed as a prudential measure” Uanguta said.
Since the last year’s report, he said the ratio of household debt, driven by mortgages and other loans and advances, had risen, growing from a ratio of 89.1% at December 2015, compared to 85.5% in December 2014.
“The trend in household debt will be closely examined and suitable policy measures will be effected to keep its growth rate at sustainable levels,” the Bon Deputy Governor said.
Corporate debt levels also grew during the period under review, with both foreign and domestic private sector debt showing an upsurge.
These high levels, he added, were ascribed to borrowing by both local and multinational enterprises to expand their operations.
Since credit extended to businesses was used for productive activities however, he said this was not considered a major risk to financial stability.
“Similarly, the acceleration in the growth rate of large exposures in the banking sectors, to sectors such as manufacturing and construction, does not pose a major risk to the financial system,” Uanguta said.
The annual financial stability reports is aimed at identifying risks and vulnerabilities in the national financial system and assess the system’s resilience to both domestic and international shocks.
As such, Uanguta said an analysis of critical incidents which could occur and impact the stability of the national payment system, was also performed.
This analysis, he said, informed the researchers on ways to prevent such incidents, including though techniques to improve operational controls. The full report can be accessed via either the Bon or Namfisa websites, www.bon.com.na and www.namfisa.com.na
DENVER ISAACS
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