Commercial banks extend N$9,2 billion relief

NAMIBIAN commercial banks between April and June this year extended loan-repayment holidays worth around N$9,2 billion, the Bank of Namibia said yesterday.

The relief was granted mainly to individuals and follows a call by the bank’s deputy governor Ebson Uanguta in March this year that commercial banks grant distressed borrowers a loan break due to economic strains caused by Covid-19.

The break was to be for a period of between six and 24 months if banks’ internal policies allow.

Uanguta then said the debt repayment break should be applied in a transparent, fair and equitable manner, and should be based on individual assessments of financial difficulties experienced by borrowers.

The central bank in March said it would also relax limits on debt and include liquidity relief for banks, as well as a reduction in the capital conservation buffer.

It had also said it would postpone the implementation of limits on the amount any single borrower may owe a bank and on the number of loans banks may extend to specific sectors.

Giving an update on the effectiveness of the central bank’s interventions yesterday, governor Johannes !Gawaxab said since the beginning of April N$9,2 billion worth of relief was granted by commercial banks altogether.

!Gawaxab said this, however, involves only about 57% of relief applications submitted to seven commercial banks which operate in the lending space in the country.

A breakdown of the overall relief shows individuals dominated approvals at N$3,9 billion – covering at least 6 500 people.

Tourism was next with 840 applicants receiving relief worth around N$2,2 billion, which was followed by the real estate sector with N$1,6 billion through 1 260 applications.

The transport and construction sectors received approval for 687 applications to the tune of N$554 million.

The recently released economic outlook by the central bank indicates these sectors were also the hardest hit, and are expected to record double digit contractions this year.

The remaining N$946 million in relief was spread across the agriculture, finance and insurance sectors, and others that were less affected by Covid-19.

Commercial banks in May were accused of not providing businesses with promised debt-repayment holidays, but were rather turning the Covid-19 situation into an additional debt-incurring scheme.

Then, the Namibian Chamber of Commerce and Industry had asked the central bank why this was allowed.

!Gawaxab said they were told by commercial banks that applicants who were rejected were not in good standing or could not prove they were affected by Covid-19.

The relief as granted involves at least 9,2% of a combined loan book of around N$100 billion.

!Gawaxab said non-performing loans at the end of June had also increased to 5,7% of the total banking industry loan book.

This ratio was at 5,2% in March this year – about N$5,3 billion.

It was reported in late June that repossessions are expected to rise this year, as by the end of March, before Covid-19 dawned, commercial banks had already repossessed cars, properties and equipment worth N$88 million, from N$65 million at the beginning of 2020.

Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for only N$85 a month. Invest in journalism, invest in democracy –
Subscribe Now!

Latest News