Banks defend sector
Allegedly only a handful of homes are repossessed
Namibia's massive banking industry is under fire.
The Bankers' Association of Namibia (BAN) said in a recent presentation to parliament that only a handful of houses on which banks granted home mortgages were sold last year due to default.In 2023, 71 homes were sold out of 277 advertised for sale. Compared to nearly N$86 million collected from house sales, commercial banks in Namibia have home loans worth about N$50 billion on their books, according to BAN.
The presentation came in response to a motion in parliament that was brought last year by the member of parliament Veikko Nekundi, in connection with excessive charges, profiteering and discrimination among banking institutions.
The association points out that houses are only sold in terms of a court order.
Loans are financed with deposits that banks must protect and late payments on home loans could lead to the failure of banks, BAN argued.
'Economic collapse'
According to the banks, a failed banking system will lead to economic collapse. BAN member banks handle deposits worth N$140 billion.
According to BAN, the size of commercial banks in Namibia, measured in Namibia dollar terms, is more than N$170.2 billion, while market capitalization is already more than N$20.2 billion.
By the end of 2023, there were 216 bank branches and agencies nationwide, approximately 1 300 automatic teller machines and 20 669 point-of-sale devices, to provide services to 1 693 198 customers.
Only 181 208 commercial bank customers use the basic bank account for which the services are not paid for. Basic bank accounts are restricted to customers who earn less than N$2 000 per month.
Banks employ 6 038 employees, of which 89% can be classified as previously disadvantaged according to BAN. A total of 3 808 bank workers are women compared to 2 230 men.
The average wage bill for the five banks in question is N$1.8 billion, while taxes for employees averages N$500 million.
From 2020 to 2023, the banks paid N$7.5 billion in taxes, according to BAN.
Five commercial banks paid out a total of N$1.1 billion in dividends in 2023. The total value of all loans was N$108 billion at the end of last year.
Allegations refuted
In response to specific allegations that banks discriminate against black customers by setting high requirements, long service delivery and that they must offer more security and pay more interest, BAN said its policy is to treat all customers equally and fairly.
The policy is set out in the 2023 code of banking practice, while fees are determined in terms of customer behaviour. Digital options with lower costs are encouraged, according to BAN.
The Banking Institutions Act no. 2 of 1998 obliges banks to disclose their fees and to base them on services rendered and the cost of services, according to the association.
These fees are justified by the Bank of Namibia (BoN) every year and customers are informed in advance about increases, the banks say.
Interest rates are determined by adding a bank margin of 3.75% to the BoN's repo rate, taking into account the cost of funds, borrowers' risks, duration of the loan and the nature of the business and the asset being financed, they added. – [email protected]