According to the report, the banks' profitability as measured by Return on Equity (ROE) increased to 35.2 percent in 2011 after falling for three consecutive years. In 2008, ROE was at 58 percent before falling to 41 percent and 34 percent in 2009 and 2010 respectively. ROE is a ratio that measures the banks' after tax profits against shareholder funds.
"The profitability of the banks, solvency and total industry credit rose at a faster rate when compared to 2010. Similarly, the banking sector reported improvements in asset quality and consequently a decline in provision for bad debts," said Bank of Botswana governor Linah Mohohlo in the report. In 2011 banks raked in P2 billion in pre-tax profits at a nine percent growth rate while after tax profits rose by 17.4 percent last year.The major contributor to the slow pace of growth in pre-tax profits was a 24 percent rise in operating costs during the year, largely due to staff costs and new technological products, such as mobile money.
