CHAMWE KAIRA
Trustco has reported in a trading statement for the year 12 months ended August 2023 that a notable factor contributing to the decline in portfolio valuations was the collective surge in discount rates, totalling 11.68 percent (approximately N$650 million, or 66 cents per share) across Trustco’s portfolios.
Trustco, a diversified investment entity said the prevailing global trajectory of escalating central bank rates appeared to have reached its apex as of the current reporting period.
“Forecasts indicate a potential moderation in these rates, hinting at an anticipated reduction in discount rates over the coming years. This expected adjustment may lead to a reversal of the valuation declines witnessed in the current financial year.”
In the real estate portfolio over the past few years, the imposition of Loan-to-Value (LTV) restrictions by the Bank of Namibia significantly contributed to a decline in property values by 42%.
However, revisions have been made by the Bank of Namibia to its loan-to-value ratio prerequisites for prospective homebuyers. These amendments now entail a reduction in mandatory deposits, shifting from the prior stipulation of up to a 50 percent deposit requirement to a maximum of 10 percent for properties owned beyond the second.
Trustco said in the commercial banking and micro-financing portfolios, the uptick in interest rates has been a favourable revenue development. However, the spectra of higher inflation amplify the risk of borrower defaults. Furthermore, the usual consequence of monetary tightening creates a contraction in credit demand, somewhat offsetting growth by raising discount rates, the company said.
The company said Net Asset Value per share (NAVPS) for the 2023-year end results will be between 98 and 136 cents per share, compared to the NAVPS of 181 cents in respect of the 31 August 2022-year end results.
Basic loss per share (LPS) for the 2023 was between (54.55) and (83.73) cents per share, compared to the earnings per share (EPS) of 145.89 cents in 2022.
Trustco said headline loss per share (HLPS) for the 2023 will be between (49.73) and (88.75) cents per share, compared to the headline loss per share of (195.13) cents in 2022.
