Stanbic Bank Botswana has reported a 16% increase in profit after tax for the first half of 2026, demonstrating resilience despite a challenging economic environment marked by inflationary pressures, liquidity constraints and continued uncertainty surrounding the diamond sector.
The bank's profit after tax rose to P354 million for the six months ended June 30, 2026, compared to P304 million during the same period last year. Profit before tax increased by 16% to P453 million.
The improved performance was driven largely by growth in both interest and non-interest income, with the bank's strategy of diversifying its revenue streams helping to offset slower lending activity.
Total net income increased to P1.06 billion from P938 million in the corresponding period last year. Net interest income grew by 12% to P641 million, while non-interest income increased by 15% to P418 million.
A particularly strong performance in trading income helped drive the growth in non-interest revenue. Net trading income jumped 51% to P245 million, from P162 million previously, supported by increased foreign exchange trading volumes and improved margins.
However, the challenging operating environment continued to weigh on the bank's balance sheet. Loans and advances declined by 14% to P20.6 billion, while deposits fell by 6% to P23.8 billion.
According to Stanbic, subdued economic activity, liquidity pressures and growing pressure on household and business incomes contributed to slower credit extension. The bank said it remained selective in its lending, focusing on sectors and clients offering sustainable risk-adjusted returns.
The decline in loans also came as Botswana's economy continued to face significant headwinds despite signs of recovery. Real GDP growth rebounded to 3.5% during the first quarter of 2026, but the country remains vulnerable to fluctuations in global diamond demand.
Inflation accelerated to 10.7% by June, well above the Bank of Botswana's 3% to 6% target range, driven largely by rising fuel, transport and administered prices.
Stanbic's credit impairment charges increased modestly to P41 million from P37 million, pushing its credit loss ratio to 0.6% from 0.5%. The bank nevertheless described its overall credit risk profile as resilient and within its risk appetite.
Operating expenses rose by 10% to P539 million, primarily driven by a 13% increase in staff costs as the bank continued investing in talent. Other operating expenses increased by 8%, partly reflecting investments in technology, IT security and innovation.
Despite the higher costs, Stanbic improved its efficiency, with the cost-to-income ratio declining to 50.9% from 52.1%.
The bank also significantly strengthened its capital position. Its capital adequacy ratio rose to 25.07%, compared to 19.27% a year earlier, providing a substantial buffer to support future growth and absorb potential economic shocks.
Looking ahead, Stanbic said the remainder of 2026 is likely to remain challenging, with modest economic growth, constrained market liquidity and continued volatility in the pula posing risks.
The bank said it would remain focused on disciplined balance sheet and risk management while accelerating the growth of non-funded income, pursuing quality lending opportunities and advancing its digital and operational transformation initiatives.