Bank profits rise to P1.7bn
Mbongeni Mguni | Thursday November 3, 2022 18:38
Bank of Botswana figures released recently indicate that the difference between the two periods was higher net interest income and significantly lower provisions for bad or doubtful debts.
Commercial banks’ net interest income in the first eight months of this year reached P3.2 billion compared to P2.9 billion over the same period last year, while the provisions for bad debts were measured at P87 million this year, compared to P279.3 million last year.
The banks’ performance in the first eight months of the year continues the sector’s recovery from the COVID-19 hit, which saw their collective after-tax profits declining by 13% in 2020 to P1.6 billion before improving to P1.9 billion in 2021.
The improved performance this year comes despite tighter margins, as the Bank of Botswana has increased interest rates by 151 basis points, while banks’ interest expenses have come under pressure from the need to compete for deposits.
Analysts believe the improved provisions for bad debts reflect the tightened credit risk assessment banks imposed in response to the pandemic. However, credit growth is gradually warming up, with the indicative rate reaching 6.6 percent in August, from 5.8 percent in July.