Household credit totals N$67 billion
Households held a staggering N$67 billion in credit as of March 2024, a record high for 2024, following the release of the Private Sector Credit Extended (PSCE) figures.
“Household PSCE growth was unchanged from March 2024 at 2.2% year-on-year (y/y), but down from 5% y/y a year prior. With growth of 0.2 month-on-month (m/m), household credit now totals N$67 billion, a new year high,” Cirrus Capital said in its analysis of the newly released PSCE figures.
The rolling 12-month average for household PSCE has slowed to 3.8 y/y, a seventh consecutive month of slowdown and the lowest in twelve months, according to Cirrus.
“Mortgage loan growth slowed to 1.6% y/y. While there are indications of a recovery in some housing markets, this is still at an early stage. Affordability remains a constraint for many households, while some banks remain cautious given the property market crash in 2017,” Cirrus said.
According to Cirrus, other loans and advances contracted 1.4% as short-term credit facilities continued to see net repayments. Overdrafts, on the other hand, saw a growth of 19.8% y/y and 2.7% m/m. “However, the bulk of the y/y figure is attributed to an earlier credit uptake, distorting the base. However, m/m growth indicates some increased uptake from households.”
Business end of the economy
Businesses took up slightly more credit in April, compared to the same period in 2023.
“Business PSCE growth improved slightly to 0.6% y/y, up from 0.1% in April 2024 and 0.8% y/y in April 2023, but the same as March 2024. The rolling 12-month average now stands at -.05% y/y. However, business credit increased 10% m/m, the first positive monthly rate in three months,” Cirrus said.
The analysts added: “Business credit has largely stagnated since early 2022, once the central bank hiking cycle began. The rapid increase in interest rates adversely impacted business, especially as many took on credit during the pandemic in order to make ends meet and credit was affordable with record-low interest rates."
According to Cirrus, business mortgage loans once again contracted, dropping 4.1% y/y, but rising 0.4% m/m. Overdrafts also contracted, failing 16% y/y and 11% m/m, with sizable net repayments in April 2024. “This is attributed to businesses in the manufacturing sector settling overdrafts.”
It added: “Other loans and advances rose 8.3% y/y and 8.1% m/m after a sizable uptake in April 2024. This is attributed to debt uptake from the mining and quarrying sector, likely related to drawdowns on facilities by one or several of the active exploration and development projects."
“Household PSCE growth was unchanged from March 2024 at 2.2% year-on-year (y/y), but down from 5% y/y a year prior. With growth of 0.2 month-on-month (m/m), household credit now totals N$67 billion, a new year high,” Cirrus Capital said in its analysis of the newly released PSCE figures.
The rolling 12-month average for household PSCE has slowed to 3.8 y/y, a seventh consecutive month of slowdown and the lowest in twelve months, according to Cirrus.
“Mortgage loan growth slowed to 1.6% y/y. While there are indications of a recovery in some housing markets, this is still at an early stage. Affordability remains a constraint for many households, while some banks remain cautious given the property market crash in 2017,” Cirrus said.
According to Cirrus, other loans and advances contracted 1.4% as short-term credit facilities continued to see net repayments. Overdrafts, on the other hand, saw a growth of 19.8% y/y and 2.7% m/m. “However, the bulk of the y/y figure is attributed to an earlier credit uptake, distorting the base. However, m/m growth indicates some increased uptake from households.”
Business end of the economy
Businesses took up slightly more credit in April, compared to the same period in 2023.
“Business PSCE growth improved slightly to 0.6% y/y, up from 0.1% in April 2024 and 0.8% y/y in April 2023, but the same as March 2024. The rolling 12-month average now stands at -.05% y/y. However, business credit increased 10% m/m, the first positive monthly rate in three months,” Cirrus said.
The analysts added: “Business credit has largely stagnated since early 2022, once the central bank hiking cycle began. The rapid increase in interest rates adversely impacted business, especially as many took on credit during the pandemic in order to make ends meet and credit was affordable with record-low interest rates."
According to Cirrus, business mortgage loans once again contracted, dropping 4.1% y/y, but rising 0.4% m/m. Overdrafts also contracted, failing 16% y/y and 11% m/m, with sizable net repayments in April 2024. “This is attributed to businesses in the manufacturing sector settling overdrafts.”
It added: “Other loans and advances rose 8.3% y/y and 8.1% m/m after a sizable uptake in April 2024. This is attributed to debt uptake from the mining and quarrying sector, likely related to drawdowns on facilities by one or several of the active exploration and development projects."
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