Business Reporter
GROWTH in Private Sector Credit Extension (PSCE) for February 2025 decreased marginally to 3.9% y/y from 4.1% y/y in January 2025; however, it did improve from the 1.7% print witnessed 12 months ago.
First National Bank of Namibia economist, Cheryl Emvula explained that the improvement is due to growth undertaken by corporates extension growth of 5.9% y/y in February 2025, a significant increase from the 0.6% growth experienced in February 2024.
Emvula added that Household credit growth remained subdued with growth of 2.6% y/y in February 2025 and slightly ahead of the 2.4% witnessed in February last year.
Other loans and advances and instalment and leasing credit continued to post growth at 8.9% y/y and 15.7% y/y, respectively, in February 2025. Overall mortgage credit continued to anchor down growth, with credit extension growth of 0.5% y/y witnessed in the period under observation.
Emvula added that both households and corporates are seeing a slow uptake in the credit type as economic pressures continue. Overdraft lending rebounded from a deep contraction of 8.6% y/y in January 2025 to -2.7% y/y in February as businesses continue to settle balances.
Household PSCE growth continues to be stagnated at 2.6% in February 2025, some 1.7-percentage points (ppts) lower than the 4.3% y/y growth recorded in the same period last year.
Emvula explained that this marks five consecutive months of stagnation. “The subdued growth was mainly driven by overdraft lending, which remained contractionary for the second consecutive month, with growth of -13.2% y/y in February from growth 18.5% y/y recorded in January. Mortgage credit growth also stagnated with growth of 0.7% y/y in February – a deterioration from the 1.9% witnessed a year ago. Conversely, other loans and advances saw growth of to 7.9% y/y in February, slightly behind the 8.1% y/y on January; however, it is an improvement on the -1.1% growth witnessed a year ago,” Emvula said.
He added that growth was also witnessed in instalment and leasing credit; however, did not improve from the previous month.
Instalment and leasing credit experienced improved growth on an annual basis moving up 6.1pptsfrom 6.2% y/y to 12.3% y/y in January as vehicle sales remain robust, with passenger vehicles sales increasing by 10.4% y/y in February and continuing to be the fastest growing category.
“Looking ahead, we expect overall credit demand from households to remain subdued as mortgage extensions (accounts for 66.58% of the loan book) continue to anchor down total PSCE growth. Likewise, households’ indebtedness and unemployment levels remain elevated, which hampers creditworthiness and access to credit.
On the corporate front, credit extended to corporates declined from 6.1% y/y in January 2025 to 5.9%(y/y in February 2025. This deceleration was primarily driven by mortgage credit growth which remained weak, contracting further from -1.0% y/y in January to 0.2% y/y in February, reflecting ongoing challenges in the real estate sector,” Emvula said.
Furthermore, a slowdown in other loans and advances which a notable decline in growth from 15.1% y/y in January to 9.6% y/y growth in February. The decrease can be attributed to weakened demand from corporates, particularly in the manufacturing, fishing, and mining sectors, as corporates prioritise net repayments over new borrowing.
