Absa Botswana unfazed despite profit drop
Pauline Dikuelo | Monday September 22, 2025 10:43
The country’s second-largest bank posted pretax earnings of P412 million for the half-year to June 30, 2025.
Absa Bank executives attributed this slowdown in profitability to a challenging operating environment defined by elevated credit impairment costs and significant pressure on revenue growth, particularly within the business and corporate banking segments.
Despite this downturn, the bank’s leadership has expressed measured optimism, pointing to a resilient underlying performance and early signs of recovery in key areas.
Commenting on the results, Absa Bank Botswana, Managing Director, Keabetswe Pheko-Moshagane, stated that whilst the bank had experienced a difficult first half, it had absorbed much of the cost pressure relative to the broader environment.
“Despite the decline in earnings, the bank remains encouraged by early signs of recovery in key segments, supported by strategic adjustments aimed at restoring momentum towards cautious growth and reinforcing balance sheet resilience,” she said.
She said a notable achievement was the bank’s delivery of over P1 billion in revenue during the first half, which remained flat compared to the same period last year.
This stability, achieved despite significant economic volatility, signals a resilient operational performance. The revenue mix showed improvement, though net interest income was affected by margin compression driven by a higher cost of funding.
Over the reporting period, net fee and commission income grew by eight percent, underscoring heightened transactional activity and successful customer engagement strategies. The Retail and Business Banking segment was the primary engine of performance, contributing 75% of the total revenue. This segment saw a nine percent year-on-year revenue increase, with its net fee and commission income rising by an impressive 13%.
Growth was anchored in successful customer primacy initiatives and the expansion of Absa’s product portfolio, including the successful market penetration of the Absa Mobi Tap solution, which supports Small, Medium, and Micro Enterprises.
In contrast, the Corporate and Investment Banking segment experienced a more difficult period, with total income declining by 14%. This was primarily due to industry-wide liquidity constraints and competitive funding dynamics that reduced deposits and muted non-funded income.
However, the corporate loan book demonstrated resilience by growing nine percent, driven by lending to non-diamond mining sectors such as telecommunications and real estate. A cornerstone of the bank’s half-year performance was its dramatically improved credit risk management. The bank’s impairment-to-pre-provision-profit ratio, which stood at 42% in 2022, has been reduced to just one percent in 2024.
This improvement is said to be a result of strengthened customer engagement, proactive early intervention strategies, and enhanced credit monitoring processes. This approach to risk ensures the bank is well-positioned to absorb economic shocks whilst continuing to support its customers.