Botswana’s banking industry has managed to stay strong through a difficult year marked by weak diamond demand, slowing global growth and liquidity strains at home.
According to the Bank of Botswana’s Banking Supervision Annual Report 2024, the sector remained profitable, well-capitalised and stable despite the broader economy shrinking by 3%.
Total assets of commercial banks rose 7.7% to P144 billion, while loans and advances grew by 6.5% to P87.1 billion. Deposits, which remain the main source of funding, increased modestly by 3% to P107.3 billion. Governor Cornelius Dekop said the system “remained safe, sound, profitable, liquid and adequately capitalised,” even amid the year’s headwinds.
Better-Quality Loans and Stronger Buffers
Credit quality improved across the board. The ratio of non-performing loans (NPLs) fell to 3.4% from 3.7% the previous year, while provisions for bad debts declined slightly to P1.48 billion. Banks’ capital strength also improved, with unimpaired capital climbing 6.8% to P18.3 billion.
Even with tighter liquidity in the final quarter, banks’ liquid assets-to-deposits ratio stood at 17.9%, comfortably above the regulatory minimum of 10%. All lenders remained well above the capital adequacy threshold of 12.5%.
Statutory banks, which include the National Development Bank and Botswana Savings Bank, also saw a rebound, with their combined NPL ratio dropping sharply from 10% to 5.7%.
Digital Push Gains Ground
Banks continued to deepen their digital reach, rolling out new mobile products and expanding access points. The number of ATMs rose to 649, and point-of-sale terminals increased by 10% to 27,586, led by First National Bank Botswana, which operates more than half of them.
Electronic payments also surged. Transactions processed through electronic funds transfers (EFTs) jumped 10.9% to P333.6 billion, underscoring consumers’ growing preference for cashless payments.
While the central bank remains confident about the sector’s resilience, it warned that credit risks could increase in 2025 if global conditions worsen and household debt levels remain high. Still, with ongoing digital transformation and a firmer regulatory framework, Botswana’s banking system appears well placed to weather the next storm.