Bank profits return to winning ways

Mbongeni Mguni | Tuesday September 1, 2026 12:05

First National Bank Botswana, the country’s largest bank by all metrics, expects its pretax profits for the full year ended June 2026 to rise by as much as P235 million. The bank reported pretax profits of P1.9 billion in the year ended June 2025.

Absa Bank Botswana, meanwhile, which is the country’s second largest bank, expects its pretax profits for the half year to June to increase by as much as P82 million. The bank reported pretax profits of P412 million in the prior period.

Both banks did not provide a reason for the expectations of higher profits.

The profit cautionaries are the first indications that the banking sector is breaking through the difficult conditions it endured in the past two years.

In 2025, commercial banks’ collective profits broke a four-year streak of growth, declining by about nine percent to P3.79 billion, as they were impacted by broader economic pressures that saw their provisions for bad debts rise fourfold.

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.

Much of the trouble was around banks’ margins, with a liquidity crunch stretching back to 2024 raising their costs of deposits, whilst the room for them to increase lending rates was limited initially by demand and then by the BoB, which placed a moratorium on rate increases.

Profits in 2025 were also hit by higher impairments, with central bank data showing that provisions for bad and doubtful debts jumped fourfold to P897 million in 2025 from P221.2 million in 2024, reflecting the tightening of economic conditions for banks’ customers.

This year, however, higher bank profits are most likely linked to the warming economic conditions, particularly the injection of more liquidity in the market, which is helping with the cost of funding.

Central bank officials recently noted a significant uptick in royalty and dividend payments to government from an improved performance by diamonds in the first quarter of the year. The BoB also paid a windfall P7.3 billion dividend to government in March, helping both public finances and overall liquidity in the financial sector.

The uptick in both budget finances and the broader economy is believed to also be helping banks’ output of less risky credit and lower impairments.

FNBB is due to release its results around September 9, whilst Absa’s are due out on September 17.