Namibian banks’ bad debt rises to N$6.6 billion

Namibian banks are currently burdened with N$6.6 billion in bad debt, a consequence of clients struggling to repay their loans

This is after giving out loans to the value of N$118.9 billion in 2024.

“The non-performing loans (NPLs) increased by N$96.3 million to N$6.6 billion in 2024 due to unfavourable economic conditions characterised by high interest rates, high inflation and unemployment which impacted the ability of households and businesses to service their debts,” reads the Bank of Namibia’s annual report.

The most significant increases in NPLs were observed in personal loans, installment sales agreements, and other loan categories.

“Personal loans have seen a significant jump of N$94.3 million,” says the report, adding that installment sales agreements, such as those for vehicles and furniture, increased by N$72.2 million.

However, the trend was somewhat offset by decreases in mortgage loans, credit cards and overdrafts.

“These three categories recorded declines of N$60.4 million, N$24.7 million and N$3.0 million, respectively,” reads the report.

Additionally, overdue loans decreased by N$1.3 billion to N$9.5 billion.

“The downward trend was mainly observed in the two-to-three-month time bucket due to strict monitoring and rehabilitation of impairment by the banks concerned,” says the report.

A “time bucket” refers to loans that are between two to three months past their due date.

However, although overdue loans decreased, the largest portion of the remaining NPLs are in the mortgage and other loan categories.

According to the report, NPLs were highly concentrated in the individual’s sector and the trade and accommodation sector, which accounted for 52.4% and 9.2%.

“Construction contributed 8.9% while agriculture, hunting and forestry accounted for 6.2% during the review period,” reads the report.

Meanwhile, manufacturing, business services, transport, storage and communication and other sectors collectively account for 22.2%.

To address the situation, banks have set aside N$3.8 billion.

According to the report, specific provisions, which are allocated for loans already identified as being at risk, saw a significant increase, climbing from N$2.2 billion to N$2.4 billion

Meanwhile, general provisions, which are set aside for potential losses on loans not yet classified as problematic, decreased from N$1.5 billion in 2023 to N$1.4 billion in 2024.