{"id":33266,"date":"2022-10-03T12:03:29","date_gmt":"2022-10-03T10:03:29","guid":{"rendered":"https:\/\/ijg.net\/research\/?p=33266"},"modified":"2022-10-03T12:03:31","modified_gmt":"2022-10-03T10:03:31","slug":"psce-august-2022","status":"publish","type":"post","link":"https:\/\/ijg.net\/research\/psce-august-2022\/","title":{"rendered":"PSCE \u2013 August 2022"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

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

Private sector\ncredit (PSCE) increased by N$505.3 million or 0.43% m\/m in August, bringing the\ncumulative credit outstanding to N$116.7 billion. On a year-on-year basis,\nprivate credit sector credit grew by 11.2% y\/y from a relatively low base a\nyear ago. Normalising for the steep rise in claims on non-resident private\nsectors over the past 8 months which mainly relates to interbank swaps sees\nannual PSCE grow by only 4.4% y\/y. We view this as a more accurate picture of\ncredit extension and thus exclude the swap transactions from our analysis going\nforward. On a 12-month cumulative basis N$4.79 billion worth of credit was\nextended to the private sector. Corporates and individuals took up N$3.52\nbillion and N$1.26 billion respectively.<\/p>\n\n\n\n

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

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

Credit\nextended to individuals grew by 0.5% m\/m and 2.1% y\/y to N$62.91 billion in August\nfrom N$61.65 billion a year ago. Overall, annual growth in credit extensions to\nindividuals slowed in August when compared to the revised 2.2% y\/y growth rate\nreported for July. The Bank of Namibia (BoN) attribute the decline to lower\ndemand in all the credit categories but instalment and leasing sales. Mortgage\nloans to individuals rose by 0.3% m\/m and 1.9% y\/y. Overdraft facilities\nincreased by 1.1% m\/m, but contracted by 5.6% y\/y. Other loans and advances\n(consisting of credit card debt, personal- and term loans) climbed by 1.1% m\/m\nand 5.1% y\/y. Instalment and leasing sales rose by 0.9% m\/m and 1.2% y\/y. <\/p>\n\n\n\n

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

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

Credit extension to\ncorporates grew by 0.3% m\/m and 8.3% y\/y in August, bringing the\ncumulative corporate credit outstanding to N$46.23 billion. Overall,\nannual growth in credit extensions to businesses accelerated in August when\ncompared to the revised 6.4% y\/y growth rate observed last month. The BoN\nascribed the increase to rising demand for overdraft credit and other loans and\nadvances by corporations in the mining and services sector. Overdraft\nfacilities to corporates grew by 2.1% m\/m and 0.1% y\/y, following a 9-month\nconsecutive year-over-year decline. Other loans and advances climbed by 0.8%\nm\/m and 19.4% y\/y. Mortgage Loans declined by 1.7% m\/m but rose by 1.2% y\/y. Instalment\nand leasing sales increased by 1.4% m\/m while annual growth for this credit category\nremained steady at 14.9% 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 banks saw a continued decline\nin August, dropping by N$6.35 billion to an average of N$6.21 billion, and\nended the month at N$3.86 billion. The decline in the market cash positions is\npartly attributed to other financial corporations\u2019 withdrawals, according to\nthe BoN. The repo balance in contrast rose to N$529.7 million in August from\nN$293.0 at the end of July.<\/p>\n\n\n\n

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

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

The BoN\u2019s\nlatest figures show broad money supply (M2) increased by N$4.97 billion or 4.0%\ny\/y to N$128.0 billion but slowed on an annual basis compared to the 11% y\/y growth\nrate recorded in July. According to the BoN, the decrease in M2 growth was due\nto a decline in both the net foreign assets and domestic claims of the\ndepository corporations. The drop was further attributed to a decline in\ntransferable deposits coupled with a contraction in other deposits over the\nreview period. The BoN\u2019s official reserve stock contracted by 4.6% m\/m or N$2.24\nbillion to N$47.0 billion. The BoN ascribed the decline in the international\nreserves stock to increased foreign currency outflows for import payments\nduring the review period.<\/p>\n\n\n\n

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

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

Despite seeing PSCE growing at its fastest rate since the pandemic on a normalised basis, growth remains well below the levels observed prior to the pandemic. We expect PSCE growth to remain subdued over the short to medium term while the central bank maintains a restrictive monetary policy and continues to raise interest rates to fight rising inflation. We expect the BoN to hike interest rates by a further 75 basis points at its next MPC meeting scheduled for 26 October to stay at pace with the interest rate hikes by the SARB. The SARB hiked its repo lending rate by 75 basis points last month. While we should see commercial banks become more willing to extend credit in the rising interest rate environment, as they experience margin expansion, demand for credit would not necessarily follow suit. The private sector has endured a lot of financial hardship over the past couple of years and there are probably fewer households and entities with the ability to take up new credit from Banks despite debt remaining relatively inexpensive by historic standards. The private sector may also be unwilling to commit to long-term expensive debt under the current lackluster economic circumstances. Therefore, we expect demand for credit to remain low while the supply of credit is set to improve.<\/p>\n","protected":false},"excerpt":{"rendered":"

Overall Private sector credit (PSCE) increased by N$505.3 million or 0.43% m\/m in August, bringing the cumulative credit outstanding to N$116.7 billion. On a year-on-year basis, private credit sector credit grew by 11.2% y\/y from a relatively low base a year ago. Normalising for the steep rise in claims on \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-33266","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\/33266","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=33266"}],"version-history":[{"count":1,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/33266\/revisions"}],"predecessor-version":[{"id":33276,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/33266\/revisions\/33276"}],"wp:attachment":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/media?parent=33266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/categories?post=33266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/tags?post=33266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}