Commercial banks liquidity tighten as deposits decline – Business

The banking industry has recorded the highest level in its loan-to-deposit ratio (LDR) in recent years, as more people borrow and dig into savings.

According to the latest sector reports, the LDR, which is a key metric used to measure a bank’s liquidity, jumped from 76.1% in 2024 to 87.5% by the end of 2025.

However, it remains below the 95% trigger threshold which serves as a red flag for potential liquidity crises.
“
The higher LDR indicates an increased reliance on deposits to fund lending activities, signalling strong loan demand amid tightening deposit inflows,” says the Bank of Namibia (BoN).

The report shows that total loans and advances grew from N$118.9 billion to N$129.4 billion, while total deposits saw a slight decline from N$148.8 billion to N$147.9 billion.

This means for every dollar sitting in a bank account, nearly 88 cents is currently being utilised for credit and loans.

  “Although the ratio remained within prudent levels, it reinforces the need for careful liquidity management to ensure adequate funding buffers as lending continues to grow,” says BoN.

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