{"id":24873,"date":"2020-07-01T16:30:33","date_gmt":"2020-07-01T14:30:33","guid":{"rendered":"https:\/\/ijg.net\/research\/?p=24873"},"modified":"2020-07-01T16:30:34","modified_gmt":"2020-07-01T14:30:34","slug":"psce-may-2020","status":"publish","type":"post","link":"https:\/\/ijg.net\/research\/psce-may-2020\/","title":{"rendered":"PSCE \u2013 May 2020"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

Overall<\/strong><\/p>\n\n\n\n

Total credit extended to the private sector (PSCE)\ndeclined by N$129.9 million or 0.13% m\/m in May, bringing the cumulative credit\noutstanding to N$102.29 billion. On a year-on-year basis, private sector credit\nincreased by 1.8% in May, compared to 3.4% in April. This is the lowest annual\ngrowth rate on our records dating back to 2002. On a rolling 12-month basis, N$1.83\nbillion worth of credit was extended to the private sector. Of this cumulative\nissuance, individuals took up N$2.92 billion, while corporates decreased their\nborrowings by N$748.1 million, and the non-resident private sector paid back\nN$342.3 million of their borrowings.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Credit Extension to Individuals<\/strong><\/p>\n\n\n\n

Growth in\ncredit extended to individuals slowed to 5.2% y\/y in May from the 5.7% y\/y\ngrowth recorded in April.  On a monthly basis household credit increased by 0.1%. Mortgage\nloans extended to individuals increased by 0.3% m\/m and 5.0% y\/y. Installment\ncredit, often used to finance vehicle purchases contracted by 0.7% m\/m and 7.0%\ny\/y. Overdraft facilities extended to individuals have increased by 0.2% m\/m\nand 10.0% y\/y. Other loans and advances (or OLA, which is made up of credit\ncard debt, personal and term loans) fell by 0.1% m\/m, but grew by 20.0% y\/y in May.\n<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Credit Extension to Corporates<\/strong><\/p>\n\n\n\n

Credit\nextended to corporates contracted by 0.3% m\/m and 1.7% y\/y in May. This is the\nfirst contraction in corporate credit extension on an annual basis since\nDecember 2005. The Bank of Namibia (BoN) attributes this contraction to repayments\nmade by corporates as some businesses restructured their credit exposure, coupled\nwith write-offs during the period. This was expected as economic activity\nremained muted during the month as a\nresult of the lockdown. Overdraft facilities extended to corporates fell by\n1.2% m\/m and 8.1% y\/y. The persistent contraction in installment credit\ncontinued in May, declining by 1.4% m\/m and 9.1% y\/y. Mortgage loans extended\nto corporates grew by 0.4% m\/m, but contracted 3.7% y\/y. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Banking Sector Liquidity <\/strong><\/p>\n\n\n\n

The overall\nliquidity position of commercial banks improved during May, increasing by\nN$572.4 million to reach an average N$3.90 billion. The balance of repo\u2019s\noutstanding fell from N$147.4 million at the start of May to zero at the end of\nthe month. The BoN ascribed the improved liquidity position to higher\ngovernment expenditure in the form of the emergency income grant, the\nsettlement of outstanding invoices for services rendered and the acceleration\nof VAT refunds.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Reserves\nand Money Supply<\/strong><\/p>\n\n\n\n

Broad money supply rose by N$4.50 billion or 11.4% y\/y in\nMay, as per the BoN\u2019s latest monetary statistics release. Foreign reserve\nbalances declined by 5.1% m\/m to N$33.7 billion in May. According to the BoN,\nthe decline is due to government payments as well as revaluation effects after\nthe Namibian dollar strengthened against the US Dollar during the period.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Outlook<\/strong><\/p>\n\n\n\n

Private sector credit extension remained depresses at the end of May, increasing by only 1.8%, with annualised growth slowing for a fourth consecutive month. Cumulative 12-month private sector credit issuance is down 75.5% from the N$7.46 billion figure as at May 2019. Rolling 12-month issuance of N$1.83 billion is now at levels last seen in 2005.<\/p>\n\n\n\n

Despite Namibian interest rates now being at their lowest\nlevels yet, we do not expect either consumers or corporates to rush to commercial\nbanks to take up large sums of debt any time soon. Economic activity remains\nvery low and a lack of demand means that growth opportunities for businesses\nremain extremely slim. Businesses that do make use of credit will likely mostly\ndo so to keep their doors open, instead of investing in capital projects. Banks\nwill furthermore remain cautious in extending loans as their risk appetite will\nbe low given the current economic environment.<\/p>\n","protected":false},"excerpt":{"rendered":"

Overall Total credit extended to the private sector (PSCE) declined by N$129.9 million or 0.13% m\/m in May, bringing the cumulative credit outstanding to N$102.29 billion. On a year-on-year basis, private sector credit increased by 1.8% in May, compared to 3.4% in April. This is the lowest annual growth rate \u2026 Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,22],"tags":[],"class_list":["post-24873","post","type-post","status-publish","format-standard","hentry","category-economicresearch","category-psce"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/24873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/comments?post=24873"}],"version-history":[{"count":1,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/24873\/revisions"}],"predecessor-version":[{"id":24880,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/24873\/revisions\/24880"}],"wp:attachment":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/media?parent=24873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/categories?post=24873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/tags?post=24873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}