Although 2017 has proven to be a challenging year for Namibia, SBN Holdings has grown its profit after tax by 10.8% off the back of moderate loans and advances growth to customers of 7.9% and a 24.6% reduction in credit impairment charges.
“Total income grew by 3.7 percent, whereas expenses grew by 3.0 percent, signalling the start of the ‘plateauing’ of our expenses growth following the expansive investment cycle in our core-banking system and physical infrastructure.
“We are continuing with our progress in managing our loan book as evidenced by the decline in the credit loss ratio to 0.5 percent from 0.7 percent. Our return on equity saw a slight decline from 20.3 percent to 19.9 percent. This was largely attributable to a lower dividend payment, diluting the return,” said Standard Bank’s chief financial officer Bryan Mandy.
The Group remains appropriately capitalised with tier 1 and total capital levels at 11.7 percent (HY16: 11.69 percent) and 14.94 percent (HY15: 15.04 percent) respectively. SBN Holdings is in a good position to meet the progressively higher requirements arising from Bank of Namibia’s intent to implement Basel III capital standards in the near future.
“Standard Bank Namibia maintained its strong liquidity position within approved risk appetite and tolerance limits. Total liquidity remained in excess of specific prudential requirements and remains adequate to meet all internal stress testing, prudential and regulatory requirements,” said Standard Bank’s chief executive Vetumbuavi Mungunda.
The Namibian economy is expected to recover from near-zero growth in 2016, supported by improved growth prospects in the primary industries and electricity and water sector. The Bank of Namibia (BON) projects the domestic economy will grow by 2.1 percent during 2017.
The projected growth for 2017 remains below potential growth of four percent, but nevertheless represents a considerable improvement from the 0.2 percent recorded in 2016. Further, a projected return to growth in the agriculture and diamond mining sectors are expected to drive the recovery in overall GDP growth during 2017.
The outlook for private sector credit extension continues to improve albeit slightly. However, sluggish demand for mortgage and vehicle loans will in all likelihood persist over the short to medium term. Also bearing in mind the latest Q1 GDP release from the NSA that now affirms that Namibia is in a recession makes for a relatively difficult outlook.
There has been some relief, with inflation being on the decline since the start of the year, standing at 6.3 percent as at the end of May. The Bank of Namibia is expected to decrease interest rates given the inflation and growth outlook, which may give the already stretched consumer more room to breathe.