Global Credit Ratings (“GCR”) has accorded the above credit rating(s) to Bank Windhoek Limited (“Bank Windhoek”, “the bank”) based on the following key criteria: 
Bank Windhoek’s ratings reflect its substantial local franchise, stable capitalisation and earnings generation, enhanced risk management framework, and conservative risk appetite. The national scale ratings reflect the high likelihood of shareholder/government support, should it be required. The rating outlooks consider Bank Windhoek’s strong market position and prospects (and continued strategic focus on funding diversification, liquidity management and streamlining internal processes) within the context of buoyant economic growth in Namibia, tempered by uncertainty regarding the global recovery.
Structural funding concentration and liquidity mismatches reflect the concentration in Namibia’s economy. Wholesale funding has remained stable at 74% of funding in F13-F14 (with increases in NCDs/debt securities improving diversification), and the top 20 deposits comprised 44.7% of total (63.4% of wholesale) funding at FYE14, slightly improved since FYE13. Funding concentration raises liquidity risk, but strong mitigations including monitoring and strategies to identify/manage liquidity risk (including unutilised funding lines and liquidity buffers) are in place.
Loan growth of 14.7% in F14 (F13: 14.0%) was in line with Namibian credit market growth. Supported by positive trends in corporate and consumer health, the bank’s credit quality metrics continued to improve, with the gross non-performing loan (“NPL”) ratio declining to a review-period low of 0.7%. NPLs were fully covered by collateral and/or specific provisions.
In F14, operating income grew 15.8% to NAD1,606m and net profit rose 21.5% to NAD533m. The F14 financial performance reflects stability in almost all key profitability metrics. ROaE was 21.3% (F13: 21.9%), and ROaA continued its stable upward trajectory, rising to 2.4% in F14 (from 1.9% in 2010). The capital adequacy ratio of 14.1% at FYE14, the ability of internal capital generation to support organic growth rates, strong risk management environment and controlled credit/liquidity risk support the bank’s conservative, stable development prospects.
Upward rating pressure would require further diversification and duration extension of funding, additional franchise entrenchment, and positive action on Namibia’s sovereign credit ratings. The ratings will be sensitive to declining asset quality, long-term earnings and/or capitalisation levels, as well as downward pressure on the Namibian sovereign ratings.