The January 2026 money and banking data show that the credit cycle is slowing in an orderly way. Liquidity conditions are normalising on a seasonal basis. The monetary environment remains supportive of growth.
Private Sector Credit Extension (PSCE) growth eased to 4.2% in January from 4.4% in December. Simonis Storm said this does not signal a change in the underlying credit trend. Corporate credit growth softened but remains positive in most major sub-sectors, except commercial property finance. Borrowing patterns still point to investment in productive assets rather than speculative activity. Household credit has started to improve after a long period of weakness.
Simonis Storm said the return of household overdraft credit to positive growth after twelve months of contraction is the most important development in the January data. It shows that earlier interest rate cuts are starting to ease financial pressure on households, especially lower-income groups that rely on short-term credit to manage cash flow.
Mortgage lending remains weak. Total mortgage credit grew by 0.1% year-on-year in January after contracting by 0.1% in December. Simonis Storm said this small improvement does not signal a recovery in the property market. High construction costs, rising utility tariffs and a mismatch between housing supply and household affordability continue to limit growth. The firm does not expect mortgage credit to make a meaningful contribution to PSCE growth in 2026.
Instalment sale and leasing credit remains the main driver of credit growth. It expanded by 17.4% year-on-year. Both households and corporates continue to focus on asset-backed borrowing that supports productivity rather than property or unsecured loans. Simonis Storm expects this pattern to continue while the property market remains weak.
From a monetary and external position, the data remain stable. Broad money supply (M2) grew by 7.6%, above inflation. SACU inflows supported international reserves, which stood at N$51.9 billion. The contraction in net foreign assets narrowed. Banking sector liquidity remains tight on a seasonal basis but shows no structural stress.
Simonis Storm forecasts PSCE growth of between 4.0% and 5.0% in 2026. The outlook depends on further Bank of Namibia rate cuts, household income recovery and the pace of corporate investment in key sectors. The firm said risks are slightly tilted to the upside if the external environment remains stable and fiscal discipline continues.The non-performing loan ratio stood at 4.3% in the fourth quarter of 2025. Simonis Storm said this level remains manageable and does not point to systemic stress. Sound capital adequacy, steady provisioning and a lending mix focused on asset-backed credit continue to support the resilience of the banking sector. – Simonis Storm Securities
