THE growth in income from bank charges and fees in the Namibian commercial banking sector eclipsed that from core interest earnings in 2019, according to PSG Wealth's banking review released in December 2019.

In the review compiled by PSG Wealth Namibia, Bank Windhoek, Standard Bank and Nedbank all recorded an upsurge in the growth in non-interest income of above 10% during 2019, outperforming the growth in interest income generated at the three banks.

First National Bank is the only bank that recorded a higher growth in interest income, which surpassed that related to banking fees and charges.

Data from The Bank of Namibia shows that the banking industry's fees and charges income from January to September last year stood at just above N$2,7 billion.

In banking, non-interest income is revenue derived mostly from fees and other activities outside the core activity of lending. In the Namibian context, the four commercial banks' assets are also dominated by advances, specifically mortgage loans.

Standard Bank Namibia recorded the highest growth in non-interest income with a increase of 14,4%, which PSG attributed to a broad-based growth across net fee and commission revenues.

The blue bank earned 7% more through its digital channels, as the consumption of digital banking services increases. The bank also shows a declining cost-to-income ratio that indicates efficiency in its operations and profitability during the period.

Nedbank's 2019 interim financial results show that the bank earned 13,7% more in non-interest income, while for the full 2018 financial year the bank's non-interest income grew 8,2%, the banking review showed.

PSG said Nedbank recorded a 10% increase in its non-interest revenue, boosted by foreign exchange solutions and the opening of 12 500 new accounts.

Bank Windhoek's non-interest income grew by 11,1% for the period, in comparison to the 4,5% growth in its interest income. The growth in non-interest income for Bank Windhoek was thanks to transaction fees, which were the biggest contributor to the upswing.

The banking review also indicated that Bank Windhoek's non-performing loans have edged up to 4,3%, which is 0,2% below the Bank of Namibia 4,5% market benchmark.

Additionally, Bank Windhoek's bad debts worsened to 0,3% for the period reviewed.

First National Bank was the sole bank to record a growth in interest income that had outperformed the non-interest income for the period, as interest income grew by 10,5% while non-interest income grew by 1,3%.

However, the review indicated that the 1,3% growth in non-interest income for 2019 included a growth of 4,8% in fees and commissions as a result of a high volume of transactions across digital and electronic channels.

The review further indicated that the slow growth in interest income overall is due to the slump in growth related to advances, specifically with regards to instalment sales, which showed negative growth, and mortgage loans which bourgeoned less than in the past.

The banking system plays an important role in the economic development of any country, and Namibia is no exception to the rule, with the total assets of the four local banks as a percentage of nominal gross domestic product increasing from 60,3% in 2008 to 68,3% in 2018, according to the 2019 banking review.

Total assets for the four banks stood at N$137 billion as at 30 June 2019, up from N$131,1 billion the previous year.

First National Bank and Bank Windhoek led the tally with total assets amounting to N$44 billion and N$39 billion, respectively, and Standard Bank and Nedbank next with N$33,9 billion and N$19,9 billion in assets.

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