By Haimbili Ruben
Namibia’s banking sector remains profitable, liquid and systemically important, but its earnings profile must be assessed against customer affordability and financial inclusion. In 2024, banking sector revenue totalled N$14.5 billion, up by N$1.7 billion from 2023. In 2025, income increased further to N$15.9 billion, a 9.7% rise from 2024. By the first quarter of 2026, total banking sector assets had expanded by 3.8% to N$195.1 billion, confirming the sector’s balance sheet strength and continued role in credit intermediation.
Revenue Streams and Sector Growth
Banks derive earnings mainly from net interest income on loans and advances, non interest income from accounts and transaction fees, card and digital-payment charges, and trading or treasury income. This diversified model has enabled profitability to remain resilient as customers migrate from branch based services to electronic, mobile and self service platforms.
Digital transformation is now a major structural driver of banking activity. In 2025, Namibia’s realtime gross settlement system processed N$1.36 trillion across 109,002 transactions, an increase of N$92.6 billion, or 7.3%, from 2024. Interbank EFT volumes rose from 26 million to 30 million transactions, with values increasing from N$404 billion to N$447 billion. Intrabank EFTs also expanded to 67 million transactions valued at N$996 billion, while emoney activity increased to 89 million transactions worth N$45 billion from 87 million transactions worth N$43 billion in 2024. This confirms a sustained migration toward digital channels.
The income composition confirms the sector’s dependence on traditional lending and fee based activity. In 2024, net interest income contributed N$8.7 billion, equivalent to 54.6% of total income, while non interest income contributed N$6.6 billion, or 45.4%. In 2025, net interest income rose by 2.7% to N$9.0 billion, accounting for 56.3% of total income. Non interest income increased by 5.4% to N$6.9 billion, led by fee income of N$5.0 billion, or 31.3% of total income. Net trading income contributed N$1.3 billion, or 8.1%, while other income and investment income amounted to N$537.4 million and N$146.7 million respectively.
Customer Charges and the Cost of Banking Services
Customer pricing remains an important part of the banking revenue model. In 2026, standard charges included card purchases ranging from free to about N$6 per transaction; own-bank ATM withdrawals that are often free for the first three monthly transactions and thereafter generally charged up to about N$15, other bank ATM withdrawals capped at N$35,USSD transfers of about N$4.70, mobile wallet cash outs ranging from free to N$14, card replacements ranging up to N$211; and urgent exchangencontrol applications costing up to about N$2,000. These charges show that routine banking activity still imposes a direct cost on households and small businesses.
Profitability and Operational Efficiency
Sector profitability remains strong, although returns have moderated. Net income after tax increased by 6.6% to N$4.7 billion in 2025. Operating expenses rose by 3.8% to N$8.6 billion, driven by staff, consultancy, administration, depreciation and amortisation costs. The cost to income ratio improved from 57.2% in 2024 to 54.1% in 2025, below the Bank of Namibia’s 65% benchmark.
In the first quarter of 2026, return on assets declined from 2.8% to 2.3%, while return on equity decreased from 21.8% to 18.1%, mainly because of lower net interest and trading income. Credit quality nevertheless improved, with the non performing loan ratio declining from 4.3% in the fourth quarter of 2025 to 4.2% in the first quarter of 2026.
Borrowing Costs and Pressure on Households and Businesses
Borrowers face tighter financial conditions following monetary policy adjustments. In June 2026, the Bank of Namibia increased the repo rate to 6.75%, lifting the prime lending rate to 10.25%. Inflation rose to 4.1% in May 2026, eroding purchasing power and raising the real burden of debt. For households, higher interest costs reduce disposable income. For small businesses, the impact is transmitted through overdrafts, working capital finance and variable rate facilities, limiting cash flow, expansion and employment capacity.
Financial Inclusion and the Affordability Challenge
The fairness of bank profitability must also be viewed through inclusion outcomes. The 2025 Namibia Financial Inclusion Survey shows that financial inclusion reached 86.0% of adults, or about 1.56 million people, up from 78.0% in 2017. Formal inclusion stood at 81.5%, while 75.6% of adults used commercial bank accounts and 71.3% used other formal non-bank financial institutions.
Despite this progress, 14.0% of adults, or about 254,480 people, remain financially excluded. Exclusion is higher in rural areas at 20.7%, compared with 8.3% in urban centres. Accessibility also remains uneven, 40.1% of urban residents can reach a bank within 30 minutes, compared with only 5.7% of rural residents, while 28.3% of rural residents travel more than three hours to a branch.
Affordability remains the binding constraint. Among adults without bank accounts, 43.2% cited insufficient funds to maintain savings as the main reason for remaining unbanked. Low fees also influence provider choice, with 37.7% of respondents identifying low charges as important, while 48.4% rely on recommendations from family, friends and communities.
Conclusion
Namibia’s banking sector is entering a new growth phase driven by digitisation, financial inclusion, and regulatory reform. While net interest income will remain a key source of earnings, future revenue growth is expected to come from high volume digital services such as instant payments, QR transactions, merchant acquiring, e-money, and open banking solutions. Additional opportunities will arise from data-driven lending, fintech partnerships, interoperable digital wallets, and value added services for small businesses and government payment ecosystems.
A strong regulatory foundation is already in place through the Payment System Management Act, 2023, supported by the Bank of Namibia’s FinTech Innovation Regulatory Framework, the Instant Payment Programme, ISO 20022 migration, and industry initiatives such as NamQR and open banking standards. Significant progress has been achieved, with high implementation rates across national payment system initiatives and ongoing integration by banks and payment providers. The key challenge now is effective execution, transforming regulatory readiness into scalable, secure, and affordable digital revenue platforms that enhance profitability, strengthen consumer protection, and promote inclusive economic growth