Thursday, September 24, 2020

Strong yearly growth for deposits and credit

By Bonnie Modiakgotla

The banking industry seemed to have performed well in 2018 with both deposits and credit showing solid performance, the financial statistics recently released by Bank of Botswana shows.

Total deposits held by commercial banks increased 9.4 percent to P69.3 billion, a strong growth compared to 2017 annual growth of 5.7 percent. Last year’s deposit growth was fueled by increases in deposits from resident businesses and households.

The resident businesses category – made up of private and parastatals – was up percent to clock P52.7 billion in deposits, with about 92 percent of those deposits held by private businesses which increased its holdings by 13 percent while parastatals’ deposits slightly grew by 3.2 percent to P4.2 billion.

Household deposits held by commercial banks leapt 9 percent to P13.8 billion in 2018. The latest data shows that businesses continue to hold the most deposits as they account for 76.7 percent of total deposits compared to 20 percent held by households.

The 2018 financial statistics reveal that annual credit growth edged 7.8 percent to P58 billion, a bit higher than 5.1 percent recorded in 2017. The share of credit to the household sector was 60.2 percent compared to 39.8 percent as share of credit to businesses.

The 2018 credit data shows that household borrowing on average has been on upward trend. Loans to households grew by 6 percent to P35 billion – the largest household credit to date according to published figures from the central bank.

Of these borrowings, personal loans account for 65.4 percent or P22.9 billion down to a year-on-year growth of 7.1 percent.  Mortgages grew by 4.4 percent last year to account for P9.6 billion or 27.4 percent of household credit, and credit card used declined by 4.4 percent to P709 million.

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