Financial services sector in massive growth

According to a Bank of Botswana (BoB) financial statistics report, commercial banks'  deposits which were sitting at a mere P5 billion  10 years ago, grew by 20 percent between February 2007 and February 2008, from P25.5 billion to P30.6 billion.

The deposits, which include current, call and savings accounts, also factor in fixed return investment paper ranging from the 31-day paper to 12 months instruments.

'Total deposits held by commercial banks rose by P178.3 million from P30.45 billion in January to P30.63 billion in February and this was due principally to an increase in deposits of households by P848.1 million (13.8 percent).

'Deposits by all other major sectors fell, including central government (by P254.8 million or 62.7 percent) largely reversing the previous month's increase, local government (P91.0 million or 62.7 percent), parastatals (P74.4 million or 2.5 percent) and resident businesses (P227.7 million or 1.1 percent),' said the report.

The share of deposits of resident businesses fell to 64.4 percent from 65.5 percent in January, while that of households rose to 22.9 percent from 20.2 percent.

Statistics also show that as at February 2008, the bulk of the deposits being held by banks were in the form of call accounts, constituting close to 40 percent followed by the six month fixed account at 24.5 percent and current accounts at 15 percent.

By account type there were increases in several categories, including P378.2 million (3.2 percent) and P562.9 million (20.9 percent) in call accounts and 12-months fixed deposits, respectively between January and February.

On the other hand, current accounts and longer-term fixed deposits fell by P263.0 million (3.4 percent) and P432.0 million (54.4 percent) between January and February, respectively.

The report also revealed that resident businesses hold the lion's share of the deposits, with banks at 64 percent followed by households at 22.9 percent and parastatals at just under 10 percent. The central government holds the least amount of money, with commercial banks taking up just a 0.5 percent share.

Between January and February, the report also showed that the amount of money being loaned out by the banks was on the rise again as credit growth rose by 2.2 percent.

'Total credit issued by commercial banks went up by P301.2 million (2.2 percent) between January and February, rising from P13 531.1 million to P13 832.3 million  in February.

'This resulted from increases of P243.1 million (4.5 percent), P1.2 million (1.4 percent) and P57.2 million (0.7 percent) in credit to resident and non-resident businesses and to the household sector, respectively.

The share of credit to the household sector in the overall credit fell to 58.7 percent, from 59.6 percent in January.

On an annual basis the amount of credit has increased by more than that of deposits as the overall credit growth between February 2007 and February 2008 rose by 27 percent.

On the foreign assets the bank reported that Net foreign assets rose by P4.3 billion (7.2 percent) from P60.2 billion in December 2007 to P64.5 billion in January 2008.

This resulted from an increase of P4 601.7 million (7.4 percent) in claims on non- residents by the depository corporations, set against an increase of P281.0 million (13.4 percent) in their liabilities to non-residents.

The Bank of Botswana accounted for most of the overall increase, with the Central Bank's claims on non-residents increasing by P3 914.7 million (6.7 percent) and P2.4 million (0.5 percent), respectively. Claims on non-residents by other depository corporations rose by P687.0 million (18.3 percent) and P278.6 million (17.6 percent), respectively.

Meanwhile the bank has announced that it will release its 2007 annual report next Monday. In a press release the bank said that the report would be publicly available on 9 June 2008.

'This will follow the morning briefing of the President of Botswana and his Cabinet on the contents of the report. 'The report will be posted on the Bank's website from where it can be downloaded free of charge.

'Printed copies of the report will also be available for purchase, but priority in its distribution will be given to those on the subscription list,' reads the press statement.