10% of bank funded cars end up repossessed
Approximately 10% of all cars acquired through bank loans and mortgages end up being repossessed for auction as the recipients are not able to service their dues with the financial institutions a survey by The Villager shows.
This has also been confirmed Africa’s Auction Authority (Aucor) Namibia who do the bulk of auctioning for commercial banks in Namibia.
Chief Executive Officer of Aucor Namibia, Neil Engelbrecht confirmed to The Villager this week that repossessed cars constitute 10% of the cars auctioned monthly.
“At Aucor we do four vehicle auctions every month with not more than 10% of the cars going under the hammer being repossessed. It is however very difficult to establish what their value is as the auction value and market value differs,” Engelbrecht said.
Bank of Namibia’s (BoN) Governor, Iipumbu Shiimi said that the N$6.2billion of instalment credit extended to households in the last financial year went to the purchasing of vehicles alone and that amount constituted 12% of the N$171 billion of the current instalment credit.
“We are worried because household credit keeps on growing by 18% to 19% constantly, this growth is constantly for funding vehicles. This is an abnormal situation and in the long run it will not be sustainable,” Shiimi said.
Shiimi noted that these kinds of rates are not only bad for the country but they also affect the individual because these debts keep on pilling up, adding, that the current debt situation for individuals is growing faster than the income.
“The household instalment credit which is 12% of the current instalment credit is growing way above the country’s Gross Domestic Product (GDP) growth. Although it has stabilised in 2014, it is still unsustainable,” Shiimi said.
In addition, the private sector’s credit instalment continues to grow and currently stands at 16.7% but however, the current instalment credit cannot be contained.
However, according to the latest BoN annual report the total loans and advances increased by N$9.8 billion to N$68bn during 2014 but it however it did not classify how much was set aside for vehicle loans but the mortgage loans in total grew by N$4.8bn whereas fixed term loans increase by N$2.2bn and overdrafts and instalment sales grew by N$1.7bn during the period under review.
In terms of the total loans, the growth in residential and commercial mortgage loans remains the major driver of growth in loans and advances.
“Personal loans, credit cards and interbank loans retracted in total by less than N$1bn,” noted the report in part.
Meanwhile, Riaan van Rooyen, the Head of Corporate Communication and Social Investment at Bank Windhoek said the bank’s non-performing loans as a percentage of gross loans and advances remains stable.
“It is well within the industry norm, which is testimony to the quality of our loan book and the prudent credit management practices of the Bank,” Van Rooyen said.
Meanwhile the current instalment credit extended to households stands at N$6.2 billion, which was an increase from N$6bn during December last year while the instalment credit for businesses was only N$4.8bn.
by Charmaine Ngatjiheue