CHAMWE KAIRA
The banking sector remained well capitalised, profitable and liquid during the first quarter of 2026, with notable improvement in asset quality, the Macroprudential Oversight Committee (MOC) of the Bank of Namibia has stated.
Total banking sector assets increased by 3.8% to N$195.1 billion, driven mainly by growth in net loans and advances, supported by higher holdings of short-term negotiable securities.
The central bank said although profitability remained strong, the return on assets declined from 2.8% to 2.3%, while the return on equity decreased from 21.8% to 18.1% during the first quarter of 2026, mainly reflecting lower net interest and net trading income.
Credit risk continued to improve, with the non-performing loan ratio declining from 4.3 percent in the fourth quarter of 2025 to 4.2% in the first quarter of 2026, largely owing to write-offs and recoveries in the mortgage loan portfolio.
“Similarly, liquidity remained adequate, with both the liquidity coverage ratio and net stable funding ratio improving further while remaining comfortably above the minimum regulatory requirements. This confirms that the banks have sufficient liquidity buffers to withstand
potential funding pressures and continue to meet funding obligations. Capital levels also remained strong, with the capital adequacy ratio broadly stable at 17.2% in the first quarter of 2026. Moreover, the latest macro-stress testing results confirmed that the banking sector remains resilient under severe macro-financial scenarios, with capital adequacy remaining above the prudential requirement,” the central bank said.
The Non-Bank Financial Institutions (NBFIs) sector remained financially sound and resilient during the first quarter of 2026, supported by continued asset growth and sustained demand for financial services.
Retirement fund assets increased by 0.1% quarter-on-quarter and 14.9% year-on-year, reaching N$303.9 billion.
Similarly, assets under management in collective investment schemes expanded by 2.5% on a quarterly basis and 16.7% year-on-year to N$126.5 billion.
“The retirement funds sector remains exposed to structural funding pressures, with the contribution shortfall projected to widen under both the baseline and severe stress-test
scenarios, reflecting demographic pressures and a weakening contribution base. Overall, the NBFI subsector maintained strong solvency positions and adequate capital reserves, suggesting that the sector is well positioned to withstand short-term volatility while continuing to play a key role in Namibia’s financial system,” the central bank said.
Financial stability risks emanating from the domestic residential property market remained contained during the review period; however, the market developments warrant closer monitoring.
The central bank said housing market activity improved during the first quarter of 2026, with mortgage credit growth increasing to 1.4% from a mild contraction of 0.06% in the previous quarter.
“Nevertheless, household mortgage credit growth remains below its historical long-term average, reflecting persistent affordability constraints. Although house price growth moderated slightly to 7.3% during the review period, housing affordability pressures remained elevated. In addition, structural challenges, including limited land delivery and growing housing demand, continue to constrain the housing market, while emerging housing financing channels continue to warrant close monitoring. Overall, the Committee assessed that current developments in the property market do not warrant changes to the existing macroprudential policy measures,” the central bank said.
The Bank of Namibia despite ongoing global headwinds, the domestic economy demonstrated resilience during the period under review.
Namibia’s real GDP grew by 2% in the first quarter of 2026, rebounding from 0.1% growth recorded in the final quarter of 2025.
The real growth was primarily driven by the agriculture, wholesale and retail trade, as well as financial intermediation sectors, while mining activity contracted due to weaker diamond demand and lower gold ore production.
Looking ahead, real GDP growth is projected to increase to 2.6% in 2026, supported mainly by stronger activity in uranium mining, wholesale and retail trade, financial services, and public administration and defence, the central bank said.
“Nevertheless, the outlook remains subject to downside risks arising from persistent geopolitical tensions, weaker global demand, rising inflationary pressures, water supply constraints, particularly for the uranium mining sector, as well as the potential development of an El Niño event.”
