FNBB has forecast that the Bank of Botswana will lower interest rates by 0.25% at the Monetary Policy Committee (MPC) meeting to be held on Monday. Should the MPC follow FNBB’s predictions, the rate drop will be the first since October 2017. FNBB is the country’s most profitable bank and also the largest by clientele numbers, with more than 500,000 customers. The bank’s executives, writing in the recently released 2018 Annual Report, listed a litany of challenges to the banking industry’s collective retail sector, but said growth was still possible. The chief executive officer, Stephen Bogatsu said households’ disposable incomes were expected to remain under strain despite the prevailing low inflation. Inflation dropped to 2.9% in September, sinking below the central bank’s three to six percent target range. “While we expect business credit growth to exceed growth in lending to households, we caution that total market credit growth is likely to remain muted at below seven percent through to 2020. “With household disposable income under pressure, and only a moderate increase in business production capacity, we expect that the drawdown on working capital facilities is likely to remain constrained,” he said.
FNBB’s retail sector accounted for P9.99 billion of its P16.3 billion loan book for the financial year ended June 30, 2018. The sector was also a major contributor of impairments for the year, with FNBB writing off P110.8 million in bad debts.
