Commercial banks in Botswana face a challenging start to 2025 as arrears climb to P8 billion and profitability slumps, highlighting broader economic strain.
The arrears figures steadied to P6.6 billion in February, a level roughly representing the average in 2025.. In January, most of the arrears, or 32 percent, were classified as “specific provision” meaning dues that are over 180 days old and subject to enhanced collection methods.. Specific provision loans are also closest to being unrecoverable.In February, the majority of loans were classified as being over 180 days old, but not in specific provisions, suggesting the maturation
of old arrears over time.. According to BoB figures, the country’s commercial banks reported P517.3 million in collective after-tax profits for the first two months of the year, a 24% drop from the same period last year, as tighter economic conditions slow down the sector.. The performance in January and February underlines the pressures seen in a sector that is traditionally one of the country’s most profitable.Last year, commercial banks’ collective profits broke a four-year
streak of growth, declining by about nine percent to P3.79 billion, as they were impacted by broader economic pressures that saw their provisions for bad debts rise fourfold.. According to central bank figures, in January and February this year, banks’ provisions for bad and doubtful debts amounted to P75.5 million, compared to P44.3 million over the same period in 2024.. Bank of Botswana trend analysis indicates that whilst the banks largely skated through the three
percent contraction in 2024, the continued weakness in the economy in 2025 began to knock on profitability.
bank arrears, Botswana economy, commercial banks, financial performance, bad debt, loan provisions