The banking sector in Botswana experienced significant growth in 2025, with total assets of local commercial banks increasing to P146.5 billion, up from P144 billion in 2024. This represents a 1.8% growth rate, which is slower than the 7.7% growth recorded in 2024. According to the Bank of Botswana's (BoB) Banking Supervision Annual Report 2025, customer deposits and shareholder funds were the primary sources of funding for asset growth.
Customer deposits grew by 3.3% and shareholder funds by 15.1%, supporting the growth in assets. The asset structure of commercial banks remained relatively unchanged between 2024 and 2025. Gross loans and advances, the largest component of the asset structure, grew by 3.3% from P87.1 billion in 2024 to P90 billion in 2025. This growth rate is lower than the 6.5% recorded in 2024.
The BoB report highlights that the asset quality of the banking sector marginally improved in 2025. The ratio of Non-Performing Loans (NPLs) to gross loans and advances declined from 3.4% in 2024 to 3.3% in 2025. Commercial banks were adequately capitalized and complied with minimum statutory and prudential requirements in 2025. The banks reported capital adequacy and common equity Tier 1 capital ratios higher than the prudential minimum of 12.5% and 4.5%, respectively.
The capacity of capital to withstand losses arising from NPLs also improved marginally. Net NPLs to unimpaired capital declined from 8.3% in 2024 to 7% in 2025. Specific provisions for the banking industry increased by 11.3% from P1.5 billion in 2024 to P1.6 billion in 2025. This resulted in an increase in the specific provisions to NPLs ratio from 49.3% in 2024 to 54.6% in 2025.
Household credit, which constitutes 63.3% of gross loans and advances, rose by 2.6% from P55.8 billion in December 2024 to P57.2 billion in December 2025. Credit to private businesses increased by 7.6% from P25.3 billion in 2024 to P27.2 billion in 2025. Credit to public sector entities increased by 17.1% from P1.7 billion to P2 billion in the same period.
The BoB report also noted that large exposures of commercial banks remained unchanged at P26 billion between 2024 and 2025. The ratio of large exposures to unimpaired capital fell from 142.4% in 2024 to 132% in 2025, indicating a low credit concentration risk in the industry. Related-party exposures increased by 22.9% from P733.8 million in 2024 to P901.9 million in 2025.
Unimpaired capital for commercial banks grew by 7.4% from P18.3 billion in 2024 to P19.7 billion in 2025. Despite this growth, four banks reported a decline in unimpaired capital due to a decline in profit or the redemption of Tier 2 instruments. The BoB's report provides an overview of the banking industry's performance and highlights the sector's resilience and stability.
Key points
- Commercial banks in Botswana reported an 8% growth in 2025, driven by customer deposits and shareholder funds.
- The banking sector's asset quality marginally improved in 2025, with a decline in Non-Performing Loans.
- Household credit and credit to private businesses increased in 2025, with growth rates of 2.6% and 7.6%, respectively.
