Asset Growth

by: The Central Bank of Namibia
Extract from KPMG Banking Survey Africa, published by KPMG South Africa

Total assets of the banking sector amounted to N$10.3 billion as at 31 December 1999, compared with N$9.0 billion recorded a year earlier, representing an increase of 14.4%. The annual average growth in total assets from 31 December 1995 to 3 1 December 1999 was 17.4%.

The ratio of net loans and advances to total assets shows an increasing trend since 1997, mainly due to a higher growth rate in loans and advances relative to other assets.

Net loans and advances continued to constitute a major portion of total assets, with a proportion of 83.5% as at the end of 1999.


Total deposits of the banking sector amounted to N$8.3 billion at 31 December 1999, compared with N$6.9 billion reported at 3 1 December 1998, recording an increase of 20.3% (or $ 1.4 billion).

At 31 December 1999, demand deposits constituted 51.3% of total deposits, followed by fixed & notice deposits at 40.4% and savings deposits at 8.2%.

For the year ended 31 December 1998, the composition of deposits was as follows: – demand deposits stood at 48.6%, followed by fixed and notice deposits at 42.3%, while savings deposits took a share of 9.1%.

The Y2K had an insignificant impact on the levels of deposits during the last quarter of 1999, with a minimal decrease in total deposits of only 0.7% (or N$59.0 million).

The loan to deposit ratio measures the extent to which the banking sector was able to mobilise deposits from the public to support its lending operation. The banking sector was mostly not able to fully cover their lending operations through deposit funds, with the exception of years 1996 and 1997. For most of the period covering 1995 to 1999, lending operations had to be supplemented by other sources, such as foreign funding and other borrowings.

Capital Adequacy

Total capital funds (qualifying capital) of the banking sector as at 31 December 1999 amounted to N$959.2 million, recording an increase of 16.0% from the amount of N$826.7 million recorded a year earlier.

In terms of the Determinations on Risk-Weighted Capital Adequacy (BID-5), all banking institutions are compelled to maintain a ratio of qualifying capital to risk-weighted assets of at least 8%. This ratio amounted to 14.4% 31 December 1999, compared with a 13.1% recorded at the end of 1998. Thus, all banking institutions maintained the risk-weighted capital ratio above the minimum of 8%.

Of the total capital funds, 88.0% was derived from the primary capital (Tier 1) comprising of share capital and share premium, general reserves and retained income. The remaining 12.0% of total capital funds was derived from secondary capital (Tier 2) comprising of general provisions for bad and doubtful debts, hybrid capital instruments, subordinated term debts and revaluation reserves.

Loan Quality

Gross loans and advances of the banking sector increased by N$959.0 million (or 11.8%) since 31 December 1998, and amounted to N$9.1 billion at the end of 1999. Over the 5-year period ended 31 December 1999, the loan book grew by an average of 19.7% per annum.

Loans and advances, Overdue Amounts & Overdue Ratio
Gross loans
and advances
*Overdue Overdue
Ratio %
1995 4 936.2 164.4 3.3
1996 5 909.8 253.9 4.3
1997 6 945.3 455.9 6.6
1998 8 122.2 821.0 10.1
1999 9 081.2 856.8 9.4
* Overdue ratio=overdue amounts/gross loans and advances
  • Overdue amountsThe amounts of loans and advances overdue of the banking sector amounted to N$856.8 million as at 31 December 1999 compared with N$821.0 million in the previous year.
  • Non-performing loans (NPL)In accordance with the Determinations on the Classification of Loans and the Suspension of Interest on Non-performing Loans (NPL) and the Provision for Bad and Doubtful Debts (BID-2), banks are obliged to make provisions against the NPL.The amount of NPL decreased by N$74.6 million (or 8.4%) from N$893.8 million as at 31 December 1998 to N$819.2 million at 31 December 1999. The ratio of NPL to loans and advances decreased since 1998 from 10.8% to 9.0% in 1999, due to a decrease in non-performing loans of 8.4%.
  • ProvisioningAs per BID-2, all banks are required to make specific provisions against doubtful and bad debts. The amount for specific provisions increased by 4.6% to N$256.9 million as at end of 1999 compared with an increase of 50.7% at end of 1998.The amount written off against provisions increased substan-tially by 74.3% during 1999, from N$15.3 million at 31 December 1998 to N$26.7 million at 31 December 1999. Further, the amount written off against income increased from N$740,000 at 31 December 1998 to N$12.3 million at 31 December 1999.The ratio of specific provisions to NPL amounts, which measures the amount of NPL covered by the specific provisions increased during the year under review from 27.5% to 31.4%. The improved ratio can be attributed to the decrease in NPL as well as to the increase in specific provisions.

    The BID-2 further compels banks to suspend all interest accruing to NPL, but uncollected, and to credit the amount to the interest-in-suspense account. The amount of interest-in-suspense increased from N$138.7 million to N$152.2 million during the year under review, representing an increase of 9.7%.

    Banking institutions complied with a requirement of maintaining a general provision account of not less than 1.0% of gross loans and advances, net of specific provisions and interest-in-suspense.

    General provision serves as a cushion to absorb losses that might occur in the future, which might come as a result of growth in the loan portfolio coupled with increases in non-performing loans.

  • Large exposuresLarge exposures refer to an exposure (credit facility) to a single person or a group of related persons that equal to or exceed 10% of capital funds of the banking institution. The limit to any person or group of related persons is 30.0% of capital funds, whereas the limit of total large exposures is 800.0% of capital funds.Total large exposures of the banking system amounted to N$3.0 billion as at 31 December 1999, compared with the amount of N$3.2 billion recorded in the previous year, and representing a decline in large exposure amounts of 6.3%.


Liquidity measures the extent to which the banking institutions are able to meet immediate cash requirements to its customers and creditors.

As per the Determinations on Minimum Liquid Assets Requirement (BID-6), all banks are required to hold at least 10% of its average liabilities to the public in the form of prescribed liquid assets.

Total liquid assets holding stood at N$1.3 billion (or 14.5% of the average total liabilities to the public) as at 31 December 1999 against the statutory requirement of N$898.3 million.

All banking institutions managed to hold liquid assets in excess of the statutory requirement as reflected in the sectoral position.

Organisations (14)

Bank Windhoek Limited, Standard Bank Namibia Limited, ABSA Bank Namibia – Minority, Agricultural Bank of Namibia, Bank of Namibia, Bank Windhoek Ltd, Bankers Association of Namibia, City Savings and Investment Bank Ltd, Commerical Bank of Namibia, First National Bank of Namibia Ltd, Institute for Public Policy Research, Namibian Banking Corporation, Nedbank Namibia, Standard Bank Corporation (Namibia)

Shaun Bakamoso

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