Bank loan arrears rise 22% on economic woes
Mbongeni Mguni | Friday March 20, 2026 11:09
The figure for last year came even as banks restrained their lending activities, with total loans extended starting 2025 at P87.2 billion, peaking at P90.6 billion in May and reaching December at about P90 billion.
The arrears rose from 6.4 percent of the total outstanding loans in January to 7.7 percent in December 2025, indicating the growing difficulties faced by banks in recovering credit extended.
Bank of Botswana figures show that of the total P6.9 billion in arrears to banks in December, the majority was owed by households at P4.3 billion or 62 percent of the total. Households, a term referring to individual borrowers as opposed to corporates and other organisations, accounted for 64 percent of total outstanding loans as at December 2025.
The central bank’s statistics also indicate that within the arrears, the majority of debt was aged between 30 and 90 days old, a category associated with higher recoverability. The oldest debt, classified as “specific provisions” and well over six months old, amounted to P1.7 billion or nearly a quarter of arrears.
The latest statistics confirm reports coming out from listed banks and indicating tepid profits for 2025 due to higher impairment provisions. Banks have cited the constrained economic conditions for the higher impairment provisions, with borrowers battling to service their debts.
Banks slowed their credit extension last year owing to the liquidity crunch in the financial sector, with many vowing to apply greater scrutiny in their lending decisions.
The country’s commercial banks generally adopted tighter credit risk assessments after the pandemic and also introduced greater automation, including Artificial Intelligence, in their processes, as a way of managing impairments.