Local banks’ collective profits have broken historic records in two of the three years since the pandemic year of 2020, defying COVID-19 impacts and downturns in the economy. Nearly all entities in the sector are digitising and boosting their non-interest income whilst tightening their operating structures and innovating around credit products and services. The latest Bank of Botswana (BoB) figures show that collectively, the commercial banks on average recorded after-tax profits of P345.3 million each month in the 11 months to November last year. By comparison, the banks collectively recorded after-tax profits averaging P276.8 million over the corresponding period in 2023.
Despite the central bank numbers lowering interest rates three times since December 2023, banks’ net interest incomes rose to P6.9 billion in the 11 months to November last year, compared to P5.8 billion over the same period in 2023. The BoB figures also show that banks were able to keep a tighter rein on the quality of their loan books, as their provisions for bad and doubtful debts dropped to P110.4 million in the year to November last year, compared to P158.5 million over the corresponding period in 2023. Speaking in a recent interview with MonitorBusiness, Bank Gaborone managing director, Olebile Makhupe, said several trends were behind the resilience and growth of profits in the banking sector.
Bank Gaborone registered double-digit growth in profits, deposits, and its loan book for the full year ended June 2024. “The notable trends that keep this sector safe in troubled waters include Artificial Intelligence which is revolutionising banking operations, from fraud detection to personalised customer experiences. There is also increasing compliance as regulatory demands are rising, requiring banks to invest more in risk management and compliance frameworks,” she said. Makhupe added that the liberalisation of financial services means the sector is opening up, allowing for greater competition and innovation, which will significantly alter Botswana’s banking growth trajectory. Digitisation has also been a major game changer for banks. “Customers are rapidly adopting online and mobile banking, reducing reliance on physical branches,” she said.
Makhupe said Bank Gaborone, in particular, has a commitment to fulfilling its customers’ financial needs and is always prepared to support them as they navigate the varying economic challenges. “Whether it is access to funding or transactional services, even as economies go through these cycles, just like the recent COVID-19 pandemic, our customers still need a dependable financial services provider, and the bank is always willing to support those customers,” she said.
