Bank Windhoek posts solid 2022 results
Biggest lender in Namibia
Bank Windhoek's latest set of annual results shows a strong recovery from the impact of the Covid-19 pandemic and a tenacious resilience despite the economic pressures of the past financial year, which were exacerbated by rising inflation on the back of increased global oil and food prices.
Bank Windhoek, Namibia’s biggest lender and the second biggest commercial bank in the country, reported a profit of about N$813.2 million for the 12 months ended 30 June 2022 –nearly 22% more than its 2021 financial year and higher than pre-pandemic profits.
This notable improvement is thanks to an increase in non-interest income earned and a lower impairment charge as the economy recovers from Covid-19.
Bank Windhoek continued to work with customers in affected industries, such as tourism, to assist them in sustaining their operations. The bank implemented deferments, refinancing and extensions to credit agreements to help customers in line with government’s relief policy.
At year-end, Bank Windhoek’s active deferred book stood at N$50.2 million, compared to N$158.8 million in 2021. The bank’s deferment document was reformatted to allow for a speedy application process at a time when a fast turnaround was essential to business owners.
LOANS AND ADVANCES
Bank Windhoek remains the market leader in loans and advances in Namibia, ending the year with a 34.8% share of the total market, compared to 33.8% in 2021.
The bank increased its total funding to N$40.4 billion during the 12 months under review, an increase of 6.1% year-on-year (y/y).
Its focus on accessing cheaper funding meant that the average cost of funding increased by only 62 basis points, despite a 100-basis points increase in the repo rate and a 131-basis points increase in the 3-month Johannesburg Interbank Average Rate (JIBAR) y/y.
The funding growth was used to meet the 4.7% growth in demand for loans and advances. The most noticeable increases were on mortgages, commercial loans and article finance.
The bank has a well-diversified exposure to sectors in its loan book, spreading out credit risk across different sectors.
The bulk of Bank Windhoek’s loan portfolio falls in the business and commercial activities sector (25%), followed by the trade and accommodation sector (17%). The agriculture and forestry sector makes up 13% of the loan portfolio, while the finance and insurance sector and government take up 9% and 8%, respectively.
ASSET QUALITY
Asset quality remains a key focus for Bank Windhoek.
The bank’s non-performing loans (NPLs) decreased y/y. Pressures on the loan portfolio still include challenging macroeconomic conditions, higher costs of living, increasing interest rates and the impact of the Russia-Ukraine conflict.
Nevertheless, the bank’s NPL ratio, excluding interest in suspense, improved from 5.5% in 2021 to 4.7% in 2022. The impairment charges to the income statement have been reduced to N$327.2 million, compared to N$376 million in 2021.
Bank Windhoek maintained a sound liquidity position during the year under review. The bank’s liquid assets exceeded regulatory requirements by 107.5%. The Bank of Namibia (BoN) required liquid assets of N$3.844 billion, and Bank Windhoek’s liquid assets totalled N$7.978 billion.
INCOME
Bank Windhoek’s net interest income increased by 7.4% in 2022 thanks to a y/y growth of 7.6% in interest-earning assets.
Notwithstanding repo rate increases of 100 basis points between February and June 2022 by the BoN, the bank’s average net interest margin remained relatively flat at 4.37% (2021: 4.36%) as average cost of funding increased over the period.
A portion of Bank Windhoek’s funding is JIBAR-linked, leading to funding repricing before the bank’s assets do. This reduces the positive endowment effect of the rate hiking cycle.
The bank increased its non-interest income by 10.3%. The main contributors were an increase in transaction-based fee income due to improved transaction volumes and an increase in foreign exchange trading income on the back of higher transaction volumes, increased foreign exchange rate volatility and higher trading margins.
Operating expenses totalled about N$1.59 billion, an increase of nearly 5.3% compared to 2021.
This notable improvement is thanks to an increase in non-interest income earned and a lower impairment charge as the economy recovers from Covid-19.
Bank Windhoek continued to work with customers in affected industries, such as tourism, to assist them in sustaining their operations. The bank implemented deferments, refinancing and extensions to credit agreements to help customers in line with government’s relief policy.
At year-end, Bank Windhoek’s active deferred book stood at N$50.2 million, compared to N$158.8 million in 2021. The bank’s deferment document was reformatted to allow for a speedy application process at a time when a fast turnaround was essential to business owners.
LOANS AND ADVANCES
Bank Windhoek remains the market leader in loans and advances in Namibia, ending the year with a 34.8% share of the total market, compared to 33.8% in 2021.
The bank increased its total funding to N$40.4 billion during the 12 months under review, an increase of 6.1% year-on-year (y/y).
Its focus on accessing cheaper funding meant that the average cost of funding increased by only 62 basis points, despite a 100-basis points increase in the repo rate and a 131-basis points increase in the 3-month Johannesburg Interbank Average Rate (JIBAR) y/y.
The funding growth was used to meet the 4.7% growth in demand for loans and advances. The most noticeable increases were on mortgages, commercial loans and article finance.
The bank has a well-diversified exposure to sectors in its loan book, spreading out credit risk across different sectors.
The bulk of Bank Windhoek’s loan portfolio falls in the business and commercial activities sector (25%), followed by the trade and accommodation sector (17%). The agriculture and forestry sector makes up 13% of the loan portfolio, while the finance and insurance sector and government take up 9% and 8%, respectively.
ASSET QUALITY
Asset quality remains a key focus for Bank Windhoek.
The bank’s non-performing loans (NPLs) decreased y/y. Pressures on the loan portfolio still include challenging macroeconomic conditions, higher costs of living, increasing interest rates and the impact of the Russia-Ukraine conflict.
Nevertheless, the bank’s NPL ratio, excluding interest in suspense, improved from 5.5% in 2021 to 4.7% in 2022. The impairment charges to the income statement have been reduced to N$327.2 million, compared to N$376 million in 2021.
Bank Windhoek maintained a sound liquidity position during the year under review. The bank’s liquid assets exceeded regulatory requirements by 107.5%. The Bank of Namibia (BoN) required liquid assets of N$3.844 billion, and Bank Windhoek’s liquid assets totalled N$7.978 billion.
INCOME
Bank Windhoek’s net interest income increased by 7.4% in 2022 thanks to a y/y growth of 7.6% in interest-earning assets.
Notwithstanding repo rate increases of 100 basis points between February and June 2022 by the BoN, the bank’s average net interest margin remained relatively flat at 4.37% (2021: 4.36%) as average cost of funding increased over the period.
A portion of Bank Windhoek’s funding is JIBAR-linked, leading to funding repricing before the bank’s assets do. This reduces the positive endowment effect of the rate hiking cycle.
The bank increased its non-interest income by 10.3%. The main contributors were an increase in transaction-based fee income due to improved transaction volumes and an increase in foreign exchange trading income on the back of higher transaction volumes, increased foreign exchange rate volatility and higher trading margins.
Operating expenses totalled about N$1.59 billion, an increase of nearly 5.3% compared to 2021.
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