BBS turns to borrowing as loans outpace deposits
Lewanika Timothy | Monday June 30, 2025 06:00
The bank's loans-to-deposit ratio stood above 100%, indicating that the bank had maxed out its deposit on lending and now had to turn to external sources for funding of other loans. Whilst the bank demonstrated robust growth in its loan book and profitability metrics in 2024, it faced pressures in its cash reserves as it lent more than deposits and also registered a drop in its liquid assets nearing the prudential requirement set by Bank of Botswana.
The banks executive in a recently released 2024 annual report posted on the bourse revealed that they would turn to borrowing and diversifying their income streams in order to improve their liquidity and increase their loan to deposit ratio.
“Ratios such as the cost-to-income ratio and loans-to-deposits ratio will remain elevated and will improve with the diversification of the assets base and introduction of diversified income streams and non-maturing deposits,” the bank's executives shared.
The report revealed that the bank promised to initiate mitigating measures to combat risks that may arise from these liquidity pressures.
“Management is aware of this and will ensure that the necessary initiatives to mitigate the negative impact are implemented to ensure that the Group and Company continue to operate with no threat to its existence in the foreseeable future,” stated the report.
The bank posted pretax profits of P5.6 million in the first half of the year, turning around from a P28.9 million loss over the same period in 2023, serving as the the inaugural profit for the bank. According to the results published on the bourse, BBS Bank’s interest income shot up 42% year on year to P233 million, off the back of a stronger loan book which went from P3.3 billion to P4.2 billion between June 2023 and June 2024.
Directors said the bank’s cost of funding significantly improved compared to the previous period due to better market liquidity and acquiring deposits became less expensive than in the previous period. BBS Bank received strong support from its corporate clients, achieving a 46% year-on-year growth in deposits. The Pilediwa Strategy commenced in 2023, and by its projected end, is expected to result in a profitable bank through the launch of various products and services, including digital offerings as well as heightened operational efficiencies.