Banks’ runaway profits slow down in tough 2025
Mbongeni Mguni | Monday March 23, 2026 06:00
The country’s commercial banks are amongst the economy’s most consistently profitable sectors, defying periods of downtrends and weaknesses over the years. Bank of Botswana figures indicate that whilst the banks largely skated through the three percent contraction in 2024, the continued weakness in the economy in 2025 began to knock on profitability.
Preliminary estimates by the central bank show that net income for the banks declined to P3.79 billion last year, from P4.14 billion in 2024. Whilst the figures represent a reduction, they also underline banks’ continuing profitability even in periods of economic contraction. In addition, whilst the P3.79 billion in net incomes last year represented a dip, it was still the second-best performance since the pandemic and was more than double the numbers of the pandemic year of 2020.
The slowdown in profits became clear earlier this month due to the absence of the now common profit cautionaries released by listed banks ahead of the reporting period. Under Botswana Stock Exchange rules, listed companies are required to publicly report when they expect their profits to be 10% higher or lower than the previous corresponding period.
Banks are usually amongst counters issuing positive profit cautionaries in each reporting period, but this year those that did were warning about declining profits.
Absa Bank Botswana expects its pretax profits to drop by between five and 15%, a figure representing up to P159 million for the year to December 2025. Bank executives attributed the drop in profits to “higher impairment charges and increased operating expenses,” with the results due to be released by March 26.
Standard Chartered Bank Botswana also expects that pretax profits for the full year to December 2025 will come in as much as 35% lower than in 2024, or P167 million down when results are unveiled on March 31.
The country’s largest bank, First National Bank Botswana, meanwhile, recently unveiled interim results to December 2025, showing pretax profits nominally flat at P1.002 billion, broadly in line with the prior period’s P1.004 billion.
The other listed banks, Access Bank Botswana and Stanbic Bank Botswana, are yet to issue cautionaries ahead of their results. Stanbic Bank Botswana is not listed on the BSE equity platform, but does publicise its results by virtue of a listing on the exchange’s fixed income platform.
Central bank data shows that higher impairment charges were the driving force behind the slowdown in profits last year. Provisions for bad and doubtful debts jumped fourfold to P897 million from P221.2 million in 2024, reflecting the tightening of economic conditions for banks’ customers.
“Impairment provisions for the period surged to P221 million (compared to P8 million for the same period in the prior year),” said FNBB directors recently. “This level of provisioning is driven by forward-looking indicators as the economy finds its way out of a difficult cycle.”
Whilst local banks have generally enjoyed lower impairment charges since the pandemic, thanks to tighter credit risk assessments and the introduction of automation via Artificial Intelligence, the pressure households and corporates have been under from the economy appears to have finally broken through to the banks’ books.
Whilst their bottom lines took a knock last year, the banks, however, enjoyed bountiful rewards from their non-interest income activities, which rose from P3.95 billion to P5.3 billion. The 34% jump is mainly associated with July 2025 changes to the exchange rate framework, which gave commercial banks greater room in the margins they charge both buyers and sellers of foreign currency (forex).