{"id":32568,"date":"2022-08-02T15:13:41","date_gmt":"2022-08-02T13:13:41","guid":{"rendered":"https:\/\/ijg.net\/research\/?p=32568"},"modified":"2022-12-05T11:26:10","modified_gmt":"2022-12-05T09:26:10","slug":"psce-june-2022","status":"publish","type":"post","link":"https:\/\/ijg.net\/research\/psce-june-2022\/","title":{"rendered":"PSCE \u2013 June 2022"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

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

Private sector credit extension (PSCE) declined by N$710.4 million or 0.6% m\/m in June, the first month-on-month decline this year, bringing the cumulative credit outstanding to N$115.9 billion. On a year-on-year basis, PSCE grew by 9.9% y\/y in June, compared to the 11.0% y\/y growth recorded in May. The growth figure slowed from 3.9% to 2.8% y\/y in June when adjusted for the large increases in claims on non-resident private sectors observed between January and March this year. On a 12-month cumulative basis N$10.4 billion worth of credit was extended to the private sector. Of this cumulative issuance, individuals took up N$1.21 billion, corporates increased their borrowings by N$2.32 billion and the non-resident private sectors took up N$6.92 billion.<\/p>\n\n\n\n

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

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

Credit\nextended to individuals contracted by 0.2% m\/m while year-on-year growth slowed\nto 2.0% y\/y in June compared to the 2.4% y\/y increase recorded in May. The decline\nin credit extended to individuals is primarily due to weaker demand for mortgage\nand overdraft credit by households during June. Mortgage loans to individuals contracted\nby 0.5% m\/m but increased 1.5% y\/y. This is the lowest year-on-year growth in\nmortgage loans observed since June 2019. Mortgage loan growth has been slowing\nsince July 2020 on an annual basis, possibly indicating that the willingness of\ncommercial banks to extend credit to individuals to buy, renovate or build new\nhouses since the pandemic remains low. Overdraft facilities to individuals contracted\nby 2.1% m\/m and 3.0% y\/y. Other loans and advances (consisting of credit card\ndebt, personal- and term loans) rose by 1.5% m\/m and 5.8% y\/y, continuing a\nsteady rise since April 2021.<\/p>\n\n\n\n

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

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

Credit extended to\ncorporates grew by 5.3% y\/y in June, slowing from the 7.4% y\/y increase\nrecorded in May. On a month-on-month basis, credit extension to corporates fell\nby 1.3% m\/m. According to the Bank of Namibia (BoN), the decline in credit\nextended to corporates is mainly due to weaker demand for short-term credit\nfacilities, specifically in the energy, mining, and commercial services sectors.\nOverdraft facilities to corporates contracted\nby 4.4% m\/m and 9.4% y\/y, the 8th<\/sup> consecutive contraction on a\nyear-on-year basis. Other loans and advances to corporates contracted by 3.1%\nm\/m but increased 14.1% y\/y, albeit from a low base. Instalment\ncredit by corporates rose by 4.6% m\/m and 18.1% y\/y. While the year-on-year\ngrowth in instalment credit was achieved from a low base, the month-on-month\nincrease was the largest since June 2019, with the amount outstanding starting\nto reach pre-pandemic levels. Mortgage loans to corporates rose by 1.2% m\/m and\n3.6% y\/y.<\/p>\n\n\n\n

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

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

The overall liquidity position of the commercial\nbanks continues to rise. Commercial banks\u2019 liquidity increased by N$1.31 billion\nto an average of N$5.10 billion in June. According to the BoN, the rise in the\nmarket cash position is partly attributable to an increase in diamond sales\nproceeds and investment liquidations by asset managers in preparation for tax\npayments. The repo balance rose marginally to N$488.0 million at the end of the\nmonth, after ending at N$438.9 million in May.<\/p>\n\n\n\n

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

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

Broad\nmoney supply (M2) rose by N$829.5 million or 5.4% y\/y to N$128.4 billion,\naccording to the BoN\u2019s latest monetary statistics. The BoN ascribed the increase\nin M2 growth to a rise in net claims on central government by the depository\ncorporations, as commercial banks increased their holdings of government\nsecurities. Foreign reserve balances rose by 4.7% m\/m or N$2.07 billion to a\ntotal of N$46.0 billion. The BoN ascribed the rise in the foreign reserve stock\nto increased commercial bank foreign currency inflows and Rand seigniorage payments.<\/p>\n\n\n\n

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

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

While PSCE grew by\n9.9% y\/y in June, above the average for the year to date, it should be noted that\nit has been achieved from the unusually large increase in credit extensions to\nnon-residents observed earlier this year. When the growth figure is normalised as\nnoted above, year-on-year PSCE growth slows to a mere 2.8% and remains subdued\nwhen compared to pre-pandemic levels. Overall, credit uptake by both\nindividuals and businesses remains relatively muted partly due to a lack in their\nability to take up credit under the prevailing inflationary and monetary\ntightening environment. We expect PSCE growth to remain low while the BoN\ncontinues its monetary tightening stance in line with other central banks\naround the world. The BoN\u2019s MPC is expected to raise the repo rate by 75 basis\npoints at its next MPC meeting scheduled for 17 August 2022 in line with the\nrate hike by the SARB at its last MPC meeting held in July.<\/p>\n","protected":false},"excerpt":{"rendered":"

Overall Private sector credit extension (PSCE) declined by N$710.4 million or 0.6% m\/m in June, the first month-on-month decline this year, bringing the cumulative credit outstanding to N$115.9 billion. On a year-on-year basis, PSCE grew by 9.9% y\/y in June, compared to the 11.0% y\/y growth recorded in May. The \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-32568","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\/32568","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=32568"}],"version-history":[{"count":3,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/32568\/revisions"}],"predecessor-version":[{"id":32577,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/32568\/revisions\/32577"}],"wp:attachment":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/media?parent=32568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/categories?post=32568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/tags?post=32568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}