The Bank of Namibia, in partnership with the Namibia Financial Institutions Supervisory Authority (NAMFISA), released the October 2026 Financial Stability Report, highlighting the country's banking sector's robust liquidity and capital defenses. Despite global economic uncertainties, Namibia's financial infrastructure remains stable. The report noted that commercial banks have increased their cash and high-quality liquid asset reserves during the first half of 2026.
According to the Bank of Namibia, the Liquidity Coverage Ratio (LCR) surged from 145.1% at the end of 2025 to 168.9% by mid-2026. This significant increase was largely driven by a 29% rise in commercial bank investments in secure local Treasury bills, averaging N$21.6 billion during the review period. This development indicates a substantial improvement in the banking sector's liquidity position.
Domestic funding conditions in Namibia remained favorable, with deposit growth surging by 10%, outpacing a modest 4.1% expansion in credit lending. This dynamic led to a decline in the industry-wide loan-to-deposit ratio to 82.4%, leaving commercial banks with substantial internal capital to finance local operations without relying on volatile external funding channels.
The Bank of Namibia's macroprudential team conducted advanced stress-testing models to assess the banking system's resilience in the face of a prolonged, severe economic crisis. The results showed that the banking system's total Capital Adequacy Ratio (CAR) demonstrated remarkable resilience, with the Financial System Stability Committee (FSSC) emphasizing that even at the lowest point of the three-year adverse projection (13.7%), the banking sector's capital buffers remained above the statutory regulatory minimum of 12.5%.
The FSSC stated that the stress test results confirm the banking sector's ability to absorb assumed shocks even under adverse macrofinancial scenarios. Additionally, the banking sector saw an actual improvement in asset quality, with non-performing loans (NPLs) falling to 4%. The central bank concluded that the macroprudential policy stance remains highly appropriate to protect Namibian consumers and ensure broader financial stability.
Large counterparty exposures within Namibia's banking sector experienced a notable contraction during the first half of 2026, dropping 8.7% to N$27.8 billion. This reduction minimized concentration risk and reinforced the country's domestic financial framework. The downward trend was primarily driven by a substantial pullback in credit exposure to the mining sector, following the successful settlement of a single massive exposure worth N$1.9 billion earlier in the year.
The Financial Stability Report also noted that large credit concentrations within the agricultural sector remained steady and unchanged. The report's findings highlight the banking sector's resilience and the effectiveness of the macroprudential policy stance in maintaining financial stability. The Bank of Namibia and NAMFISA will continue to monitor the sector's performance to ensure the stability of the financial system.
Key points
- The banking sector's Liquidity Coverage Ratio (LCR) increased to 168.9% as of mid-2026.
- The banking sector's capital buffers remained above the statutory regulatory minimum of 12.5% even under adverse macrofinancial scenarios.
- Non-performing loans (NPLs) fell to 4%, indicating an improvement in asset quality.
