The country’s eight commercial and two statutory banks performed satisfactorily during 2022, data shared by the central bank in its annual report for that year shows.
The Bank of Botswana figures show that the banking industry was profitable, with net after-tax profit increasing by 49.5 percent to P2.7 billion in the 12 months to December 2022 from P1.8 billion in the corresponding period in 2021. The growth in the net after-tax profit was mostly driven by an increase in net interest income from loans and advances.
The central bank’s Monetary Policy Committee which is responsible for ensuring price stability in the country, increased MoPR from 1.65 percent in April 2022 to 2.65 percent in August 2022, and has maintained it to date. The increased profits of banks in 2022 have been linked to amongst other things the central bank’s monetary policy stance which saw the MoPR reaching current rates.
This also led to a positive contribution towards the commercial banks asset whose quality improved as non-performing loans (NPLs) decreased by 6 percent from P2.9 billion to P2.7 billion in the same period.
“The industry was profitable. The growth in the net after-tax profit was mostly driven by an increase in net interest income from loans and advances”, says Innocent Molalapata Director, Research and Financial Stability Department at the central bank.
The Bank of Botswana data also reflect that the ratio of NPLs to gross loans and advances declined from 4.2 percent in December 2021 to 3.8 percent in December 2022. The average capital adequacy ratio (CAR) for the banking industry was 20 percent in December 2022, while the liquid asset ratio (LAR) was 17 percent in the same period. CAR and LAR were both higher than the prudential and statutory thresholds of 12.5 percent and 10 percent, indicating that the banking industry was adequately capitalised and liquid.
Overall, the statement of financial position for the banking sector grew, with total assets increasing by 7.7 percent from P108.6 billion in December 2021 to P117 billion in December 2022. Loans and advances, which constituted 62.6 percent of banking industry assets, rose by 6.2 percent to P73.2 billion in December 2022 from P68.9 billion in December 2021. Meanwhile, on the liabilities side, customer deposits increased by 7.8 percent from P84.4 billion to P90.9 billion in the same period.
