M2 slows but banks’ liquidity up to N$1.7 billion

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Windhoek

The annual growth in broad money supply (M2) slowed to 3.9 percent at the end of November 2016, from a growth of 4.6 percent at the end of October 2016. However, the Bank of Namibia notes in its latest Money and Banking

Statistics Report that the overall liquidity position of commercial banks rose at the end of November 2016 to N$1.7 billion at the end of November 2016. This reflects a month-on-month increase of N$646.2 million which is mainly due to higher South African rand inflows recorded during the review period.

The 12-month growth in M2 slowed to 3.9 percent at the end of November 2016, when compared to the 4.6 percent at the end of October 2016. The slowed growth in M2 is mainly attributed to the slow growth in domestic claims.

Meanwhile, BoN’s latest report indicates that the annual growth in total private sector credit extension (PSCE) fell at the end of November 2016. Growth in total PSCE stood at 9.3 percent at the end of November 2016, reflecting a slowed growth of 0.8 percentage points when compared to the 10.1 percent at the end of October 2016. The slowed growth in PSCE is mainly reflected by a decrease in demand for credit by the corporate sector. “Total PSCE in nominal terms amounted to N$85 billion at the end of November 2016 compared to N$84 billion at the end of the prior period. On an inflationary adjusted basis, growth in real PSCE stood at 1.8 percent at the end of November 2016, lower than the 2.6 percent recorded at the end of October 2016,” reads BoN’s Money and Banking Statistics Report for November 2016.

The report continued that Namibia’s overall inflation rate remained stagnant during November 2016, with the average annual inflation rate at 7.3 percent. However, on an annual basis the overall inflation rate increased by 4.0 percentage points when compared to 3.3 percent recorded in November 2015.

Also in the report is growth in total credit extended to the corporate sector, which slowed at the end of November 2016. The 12-month growth in total credit extended to the corporate sector was 7.9 percent at the end of November 2016, lower than the 10.7 percent at the end of the preceding month. The slowed growth was reflected in all credit categories. The annual growth in credit extended to the household sector rose at the end of November 2016 while the annual growth in total credit extended to individuals stood at 10.3 percent, 0.6 percentage points higher than the 9.7 recorded in the prior period.

Growth in overdraft credit slowed on annual basis at the end of November 2016. The annual growth in overdraft credit slowed to 7 percent at the end of November 2016, compared to a higher growth of 8.4 percent at the end of October 2016. The slowed growth mainly came as a result of a decreased demand for overdraft facilities by businesses during the reviewed period. The annual growth in other loans and advances, such as personal loans and credit cards advances, slowed at the end of November 2016. Annual growth in other loans and advances slowed to 13.7 percent at the end of November 2016, 1.3 percentage points lower than the 15.0 percent at the end of October 2016. The decrease in growth during the review period was mainly as a result of a decrease in demand for this credit category from the corporate sector.

Growth in instalment credit slowed at the end of November 2016. The annual growth in instalment credit extended to the private sector reduced to 6.1 percent at the end of November 2016, compared to the 7.1 percent recorded at the end of October 2016. This slowed growth is evident in both the household and
corporate sectors.

The annual growth in mortgage credit extended to the private sector slowed at the end of November 2016. Mortgage credit, which accounts for more than 50 percent of total PSCE, grew by 8.6 percent at the end of November 2016, when compared to a growth of 9.4 percent at the end of the October 2016. This slower growth was a reflection of the continued decline in mortgage advances to businesses, mainly for commercial purposes.

The BoN report also detailed the stock of foreign reserves, which rose at the end of November 2016. International reserves grew to N$25.5 billion at the end of November 2016, compared to N$25.1 billion at the end of the prior period. The increase in the level of reserves for the month came as a result of net commercial bank sales of rands as well as the US dollar receipts with respect to the receivables from Banco National de Angola (BNA).

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