Tuesday, December 7, 2021

Banks profits on the rise

Botswana’s banking sector continues to be resilient, raking in profits in a challenging environment, and the sector could be on its way up in increasing earnings after two years of falling profitability.

The lenders might be on their way back to higher profits as data for the first five months of 2021 shows strong performance, with net after tax profit registering P828.7 million, higher than P660.4 million in the same period last year.

The rise in profitability this year is aided in part by low base effect after performance was suppressed last year against the background of loan repayment moratoria and restructuring to support customers adversely affected by the impact of COVID-19.

“Notwithstanding the negative effects of COVID-19 on the banking-industry business, the asset quality for banks improved, resulting in a decrease in the ratio of non-performing loans (NPLs) to gross loans and advances from 4.8 percent in December 2019 to 4.3 percent in December 2020.,” the central bank noted in its recently released annual report for 2020.

The net after-tax profit from the commercial banks declined by 17.5 percent from P1.8 billion in December 2019 to P1.5 billion in December 2020, largely reflecting the depressed business activity from the COVID-19 pandemic. In 2019, the banks hit their highest profitability, delivering about P2 billion in after tax earnings.

Total banking assets increased by 4.6 percent from P98.7 billion in December 2019 to P103.3 billion in December 2020. Loans and advances, which comprised 63.5 percent of assets, rose by 4.4 percent to P65.6 billion in December 2020 compared to P62.8 billion in December 2019. With regard to liabilities, customer deposits increased by 6.4 percent from P75.7 billion to P80.5 billion.

RELATED STORIES

Read this week's paper