First National Bank of Namibia (FNB) reports a slight increase in the Private Sector Credit Extension (PSCE) growth rate for January 2025, from 4.0% year-over-year to 4.1% year on year. This suggests “credit growth has continued, albeit at a modest rate.”
The marginal uptick in PSCE indicates a steady expansion of credit, signalling a rising demand for credit in the private sector. The 4.1% year on year increase surpasses the 2.4% year on year growth recorded in January 2024, signalling “a clear acceleration in credit growth over the year.” This could reflect improved lending conditions or increased borrowing due to “better economic prospects, lower interest rates, or other factors stimulating borrowing.”
FNB Namibia attributes the improvement to corporate credit demand, which rose to 6.1% year on year in January 2025 from 5.4% year on year in December. Conversely, household credit growth declined to 2.6% year on year from 3.1% year on year. “Credit categories, ‘other loans and advances’; ‘instalment and leasing credit’ continued to post growth at 12.3% year on year and 16.7% year on year, respectively in January from 10.3% year on year and 16.3% year on year, respectively in December 2024.” However, “overall mortgage credit reduced to 0.3% year on year in January 2025 from 0.6% year on year in December as both household and corporate uptake was low. Overdraft lending growth fell deeper into contractionary territory to 8.6% year on year in January from -6.0% year on year in December as businesses continue to settle balances.”

Household credit

Household PSCE growth declined to 2.6% year on year in January 2025 from 3.1% year on year in December 2024, unchanged from the previous year. “The subdued growth was mainly driven by overdraft lending which contracted to 14.4% year on year in January 2025 from muted growth 0.0% year on year recorded in December. Mortgage credit growth also reduced slightly to 0.7% year on year in January from 0.8% year on year in December.” “Other loans and advances also decreased marginally to 8.1% year on year in January 2025 from 8.2% year on year in December 2024.” However, “instalment and leasing credit…came in at 12.3% year on year in January 2025 from 10.6% year on year in December 2024 as vehicle sales remain robust, with passenger vehicles sales increasing by 9.6% year on year in January and continuing to be the fastest growing category.” FNB anticipates “overall credit demand from households to continue to remain subdued as unsecured lending growth decelerated to 3.3% year on year in January from 6.6% year on year in December but remained above secured lending growth which posted 2.3% year on year in January 2025.” They note “households’ indebtedness is still elevated, evidenced by the slow uptake in most credit categories, especially mortgage credit at 0.7% year on year, which remains below the 2024-year average growth of 1.5%.” “Mortgage credit makes up 67% of the total credit categories and given its subdued growth, we expect this line to restrict overall household PSCE growth.”

Corporate credit

Corporate PSCE growth increased to 6.1% year on year in January 2025 from 5.4% year on year in December, significantly above the previous year’s 2.1% year on year. This indicates “greater business activity, confidence, and investment.” 
“This growth is mainly driven by other loans and advances credit demand, which grew to 15.1% year on year in January 2025 from 11.6% year on year growth in December, as demand from corporates in the mining and construction sectors increased.”
“Overdraft lending posted smaller contractions in January 2025 at -7.0% year on year from -7.6% year on year in December as corporates continue to settle balances.” “Instalment and leasing growth slowed to 22.7% year on year in January 2025 from 24.1% year on year in December and remains robust as commercial vehicle sales have reduced m/m by 15.5% but grew annually by 3.5% due to businesses rebuilding their fleets and sustained business confidence.” 
“Mortgage credit growth fell deeper into contraction posting at -1.0% year on year in January 2025 from -0.1% in December.” FNB expects “the overall growth in corporate credit demand to be resilient as the recent easing in the repo rate by the Bank of Namibia (BoN) to 6.75%, reduces the cost of credit, which could sustain the high credit demanded by corporates,” adding that “although the appetite for credit uptake fluctuates monthly, the average trend is upwards and indicates improving business confidence.”