Bank profits slip as bad debts rise

Local banks reported profits of P661.2 million in the five months to May 2020, compared to P715.2 million over the same period last year. A major driver of the weaker performance this year was higher impairments, which were pegged at P317.2 million in the first five months of 2020, compared to P132 million last year, more than double the figures in 2019.

While Bank of Botswana researchers did not provide reasons for the higher impairments, the Covid-19 crisis is known to have hit commercial banks’ hard, as clients have struggled to service their debts. Although local banks collectively provided repayment holidays to their clients to help them through the crisis, many sank into arrears as business trading conditions tightened due to the lockdown and travel ban imposed as responses to the pandemic.