Botswana’s banks on course for record profits

23 Feb 2023

Botswana’s commercial banks registered collective after-tax profits of P2.4 billion between January and November 2022, on track for the highest profits ever recorded by the sector.

The banks previously recorded the highest after-tax profits in 2018 at P2.02 billion.

According to recent central bank figures, during the first 11 months of last year, Botswana’s commercial banks raised their net interest incomes to P4.6 billion, almost 15% above the same timeframe in 2021.

The Bank of Botswana (BoB) hiked interest rates three times last year in a bid to curb inflation.

In addition, provisions for bad and doubtful debts last year declined more than 65% to P165 million, as banks made the most of the tighter risk controls implemented since the outbreak of the pandemic. The country’s largest bank - in terms of client numbers and balance sheet - First National Bank Botswana (FNBB), registered a 20% fall in total impairments for the half year ending December 2022, Mmegi Online reports.

Following the onset of the Covid crisis, the majority of banks tightened their credit risk protocols and continue to do so today.

“FNBB has continued to deploy its financial resources appropriately and prudently, with conservative capital and provisioning levels,” the bank’s directors stated last week in regard to the findings. “This has allowed the bank to respond to customer needs by extending credit selectively without relaxing its overall credit parameters.”

In addition, further data from the Bank of Botswana signals banks’ collective arrears declined below P5 billion in November last year, after remaining above this figure for the majority of the time since the pandemic outbreak.

This is despite most banks in the country prudently ramping up their lending activities as the economy continues to improve.