Non-bank sector’s profits reach P2bn
Pauline Dikuelo | Monday November 8, 2021 06:00
The Non-Bank Financial Institutions Regulatory Authority's (NBFIRA) 2021 Annual Report released on Tuesday indicates that the sector’s profits largely came from the insurance and capital markets players. Non-bank financial institutions also include microlenders, retirement funds, the Botswana Stock Exchange and others.
Available data trends have previously indicated that the financial sector was generally resilient in the face of COVID-19’s impact, with insurance and pension funds performing well, while the capital market players also enjoyed stellar returns from offshore equities.
In 2020, total assets of the non-bank financial institutions’ grew to P129 billion, or 2.5 percent higher than the prior year. With those numbers, the sector retained its dominant share of the broader financial sector, with nearly 54% of assets. Retirement fund assets continued to dominate the non-bank financial sector’s assets, with a market share of more than 70%.
Other profitability indicators were also healthy for the non-bank financial sector, with the return on assets growing from 5.8 percent in 2019 to 6.8 percent in 2020. The sector’s liquidity position improved based on a 10% reduction in liabilities from P21 billion in 2019 to P19 billion in 2020.
Another sign of resilience, according to NBFIRA, is that the regulated entities increased in number from 764 to 786 between 2019 and 2020.
Non-Bank Financial Institutions Regulatory Authority (NBFIRA) chief executive officer (CEO) Oduetse Motshidisi said the industry performed relatively well and attained success across all the key deliverables. He, however, added that in 2020, there had been a need to adjust the regulatory and supervisory plans for the sector to minimise business disruptions during the tougher COVID-19 conditions.
“The aim was to ensure financial stability and soundness, but also support the regulated entities to remain agile and resilient,” he said. “In that regard, the regulatory authority adopted a facilitative approach in line with national efforts to mitigate the effects of the pandemic on the performance of regulated businesses.”
During the reporting period, NBFIRA assessed the non-bank financial sector to be stable and financially sound with no obvious vulnerabilities in the short to medium term.