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Bank profits slip as bad debts rise

MBONGENI MGUNI
Bank Of Botswana
The collective profits of local commercial banks dropped about eight percent in the first five months of the year, compared to the corresponding period last year, numbers from the Bank of Botswana indicate.

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

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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.

Banks’ net interest and non-interest incomes for the five months to May 2020 were both higher than in 2019, measured at P1.9 billion and P1.09 billion respectively. This is compared to P1.7 billion and P10.7 billion respectively in the first five months of 2019



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