31 Mar 2026

Absa Bank Botswana has delivered overall strong financial results for the year 2025.

This was despite the year marked by fiscal pressure, persistent geopolitical tensions, tightened liquidity conditions, rising credit stress across not only the banking industry but various sectors of the economy.

Revenue increased by five per cent by December 31^st 2025 to P2.39 billion, while profit before tax dipped by 10 per cent to P951.6 million compared to the previous year.

Non-Interest Income remained a key driver of the business, rising 10 per cent to P589.5 million compared to the previous year.

This strong revenue line was mainly driven by net fee and commission income as well as trading income.

Absa Bank Botswana Managing Director, Ms Keabetswe Pheko-Moshagane said the performance reflected resilience and discipline in the midst of a dipped and challenged domestic economy.

Globally, the economic growth remained resilient at around 3.3 per cent, while in sub-Saharan Africa growth remained stable at around 4.1 per cent supported by easing inflation across key sectors.

However, the environment still remained constrained characterised by high debt levels, fiscal pressures and climate related risks.

For 2025, the economy contracted by 0.4 per cent caused by weak diamond demand, their lower prices as well competition from lab-grown diamonds.

The domestic economy remained under-sustained with consecutive contraction across the quarters, however showing a modest recovery in quarter three of 2025.

This recovery was supported by improved diamond production and early gains in the value addition industries across other sectors.

In 2025, inflation rose averaging 2.7 per cent, which is slightly below the Bank of Botswana lower end range target of 3-6 percent.

This was primarily caused by reduced domestic demand by government, lower fuel prices, reduced water and electricity tariffs for the lower income households.

The contained inflation provided some cushion for households in terms of enabling disposable income for households.

Despite a challenging environment, the bank has remained profitable, resilient and strategically focused while continuing to invest in technology that will sustain long-term growth.

On a heavier note, the cost to income ratio of the bank significantly increased to 55.6 percent compared to the previous year.

This was attributed to the bank’s strategic alignment to notable industry shifts, specifically the heightened forex compliance framework, constrained deposits, investment in cybersecurity as well as cash flow challenges in the commercial and corporate investment segments.

According to Ms Pheko-Moshagane, the weaker microeconomic environment impacted their business banking and corporate banking segments as customers adopted a more vigilant approach resulting in lower credit demand and lower transaction fees. Business exposed to government experienced delays in payments causing significant cash flow challenges.

This vulnerability caused the bank to prudently increase impairments in response to a more uncertain credit environment.

Collectively, all these factors caused a 22 per cent impairment spike compared to the previous year. Furthermore,she said liquidity conditions remained tough, consequently causing prolonged, constrained competition for deposits across the industry resulting in increased pricing and margin compressions.

This caused a 41 percent increase in their interest expense as a response to the cost of funding.

The adjustment of the Pula led to currency weaknesses, resulting in an increase to their cost of foreign denominated expenses, which largely are related to technology services. Costs were increased by their priority towards strengthening cyber security and fraud prevention as digital adoption increased across the industry.

The bank spent on scaling secure digital capabilities to ensure that while they continue to offer banking services, controls are in place to ensure that customers transactions are protected at all times.ENDS