The Macroprudential Oversight Committee (MOC) of the Bank of Namibia at its third meeting held on 4 August 2022 reviewed the overall state of global and domestic financial stability, paying particular attention to the developments in and risks to the Namibian financial system.
The Committee concluded that the financial system is stable, resilient and sound despite prevailing risks and vulnerabilities.
“The banking and non-bank financial industries continued to perform adequately and remained profitable during the first half of 2022. The banking industry expanded its balance sheet and remains liquid, profitable, and well capitalised, while the non-bank financial industry is reporting funding and solvency positions above the prudential limits. The domestic economy is expected to improve in 2022 and 2023, albeit at a slower pace than previously anticipated. The resilience of the domestic financial system has enabled it to withstand the impact of geopolitical tensions, inflationary pressures, tightening monetary policies and Covid-19,” Deputy Governor of the Bank of Namibia, Ebson Uanguta said.
The committee also acknowledged that global financial conditions have tightened considerably over the first half of 2022, with a negative outlook; banking sector assets maintained positive growth during the first half of 2022; Namibia’s payment system and infrastructure remained stable and efficient; the Non-Bank Financial Institutions (NBFI’s) remained stable, profitable and sufficiently capitalised and that growth in private sector credit extended (PSCE) remained subdued during the period under review.
“In pursuit of safeguarding the stability of the Namibian financial system, the Bank of Namibia in collaboration with NAMFISA will continue to monitor risks and take appropriate steps. Potential financial vulnerability build-up would largely emanate from inflation and the impact on household disposable income and corporate profitability. Furthermore, the MOC will continue to monitor the level of asset quality. Of continued concern is the vulnerability build-up observed in the government debt level which has increased above the domestic threshold and SADC target. The Committee noted that the relief measures that were implemented at the onset of the COVID-19 pandemic by the Government, the Bank of Namibia and NAMFISA remain in place and will continue to cushion the financial system against a potentially severe impact,” Uaguta further said adding that at present, the Macroprudential Oversight Committee is of the view that the current developments do not warrant further macroprudential policy interventions; however, the Bank of Namibia remains steadfast and will take remedial macroprudential actions with the tools at its disposal if and when warranted.