CHAMWE KAIRA
Namibia’s banking sector continues to attract investors, though differences in earnings quality among listed banks have become structural rather than cyclical, according to the latest Banking Report 2026 by Simonis Storm.
The report identifies FirstRand Namibia as the preferred banking stock on the Namibian Stock Exchange (NSX), citing its ability to consistently generate returns on equity above the current cost of equity across a range of economic scenarios.
According to the report, the investment case for FirstRand Namibia does not depend on an improvement in the economic cycle, making it the strongest banking franchise for investors seeking exposure to the sector.
Standard Bank Namibia received an accumulate rating based on valuation considerations.
However, Simonis Storm said investors should closely monitor the bank’s deposit growth performance when its first-half 2026 results are released in August.
While the valuation gap has narrowed under the current 10.73% yield on Namibia’s 10-year government bond, the analysts believe the bank still offers meaningful total return potential when future dividend income is taken into account.
In contrast, the report recommends reducing exposure to Capricorn Group until several key indicators improve.
These include stabilisation of Stage 2 expected credit losses, impairment growth slowing to below revenue growth, and operating cost growth moderating to mid-single-digit levels.
Simonis Storm argued that the recent rise in Capricorn Group’s share price should be viewed primarily as a technical and liquidity-driven development rather than one supported by fundamentals.
The report pointed to the disclosed sale of 830,000 shares by a connected party at N$27.86 per share as providing additional market context, while underlying earnings data continued to warrant caution.
Letshego Holdings Namibia was classified as a satellite investment position.
The report noted that the company’s deduction-at-source lending model provides some protection amid pressure on household incomes but does not eliminate funding risks or potential regulatory challenges.
The report found that the blended forward dividend yield of the banking counters carrying overweight and accumulate recommendations is approximately 10%, which remains below the current 10.73% yield available on Namibia’s 10-year government bond.
As a result, Simonis Storm said banking shares must be justified on the basis of total return potential rather than income alone.
The firm highlighted surplus capital, sustainable franchise strength, operational efficiency, and the ability to generate returns above the cost of equity as critical factors for investors.
The report stressed that quality within the sector can be measured through funding costs, credit quality trends, cost management, and the ability to maintain profitability throughout interest rate cycles.
