Bank Profits Reach Highest Level Ever
Mbongeni Mguni | Monday February 18, 2019 12:03
Even without the December statistics, the levels reached by November were comfortably the local banking sector’s best performance in terms of profitability. After 2018, the next best years for local commercial banks was 2013 when profits reached P1.76 billion and 2012 when they raked in P1.75 billion. In 2017, bank profits were pegged at P1.25 billion.
According to the latest Bank of Botswana update, local banks super profits in 2018 were anchored by the containment of bad and doubtful debts, which fell to P417 million by November, compared to P1 billion for the full year 2017.
Collective net interest income for the year to November 2018 was P3.6 billion, down from P3.9 billion, but local banks had lower non-interest expenses at P3.5 billion from P3.9 billion.
Bank of Botswana statistics show that commercial banks were more profitable in the first half of 2018, than the second, raking in P860 million in profits in the first six months of the year.
Previously, Botswana Bank Employees Union general secretary, Lebogang Keabetswe told Monitor Business that local banks were reaping the dividends of interventions they had been instituting in the past years. “In the past years, the banks have been actively restructuring their functions so as to better leverage their competitive edges,” she said.
“Year after year, we have seen banks diversifying their revenue streams. There has been a lot of focus on foreign exchange and use of channels or digital solutions.
“Products are being tailor made to suit end users and in return, the uptake sustains the banks in the profits they make.
“We have seen banks, through their restructuring, aligning their processes and the right skills to the relevant roles.”
Keabetswe added that the rigidity of the bank rate, last reviewed in October 2017, had been a plus for local banks.