Simonis Storm Securities says Namibia’s banking sector remains profitable, but performance gaps between institutions are widening as funding strength and earnings resilience become key differentiators.
The firm identified FirstRand Namibia as the strongest performer, reporting headline earnings of N$1.066 billion and a return on equity of 30.2% in the last financial year. This was supported by lower funding costs, improved margins and reduced non-performing loans.
It said the bank’s funding repositioning, including a 9.4% increase in franchise deposits and a 26.7% reduction in institutional funding, has strengthened its ability to absorb potential credit losses.
“The bank does not need a benign outcome to defend returns. With a sub-50% cost-to-income ratio and the lowest funding cost in the system, it has the widest earnings buffer and the most capacity to absorb a credit cycle deterioration,” the report said.
Standard Bank Namibia reported profit after tax of N$1.187 billion and a return on equity of 21.0%, supported by improved asset quality and lower impairments, although deposits declined by 4.5%.
The report said that while valuation remains supportive, the bank faces potential funding risks in a tightening liquidity environment, particularly if deposit competition intensifies and margins come under pressure.
Capricorn Group recorded profit after tax of N$920 million, with return on equity declining to 15.0% as impairments increased by 53% and operating costs rose.
“The group enters a more difficult macro phase with a structurally higher cost base, compressing earnings at a time when credit conditions are already deteriorating,” Simonis Storm said.
The analysis added that portfolio positioning should favour stronger balance sheets, with FirstRand Namibia identified as a core holding, Standard Bank Namibia as a conditional opportunity, and Capricorn Group as more exposed to downside risk.
“Overweight quality, selectively add valuation, and reduce exposure where earnings risk is skewed to the downside,” Simonis Storm said.