Realised investment gains and foreign exchange sales helped the Bank of Botswana post P5.2 billion in net income despite major unrealised market losses.
BONGANI MALUNGA
The Bank of Botswana (BoB) navigated global market turbulence and significant unrealised losses to post a strong net income of P5.2 billion in 2025, up from P3.9 billion recorded in 2024.
The performance, unveiled during the Bank of Botswana Economic Media Briefing in Gaborone last week, underscores the central bank’s ability to withstand volatile financial markets while maintaining a disciplined investment and accounting strategy.
The P5.2 billion net income was driven primarily by realised investment gains and strong foreign exchange transactions, with earnings comprising P5.2 billion in realised investment profits and a further P1.5 billion generated through foreign exchange sales. The figure also incorporates dividends, interest income received by the central bank, movements in exchange rates, and market-related gains and losses.
GAIN DRIVERS
Explaining the drivers behind the improved performance, BoB Chief Financial Officer Dr Daniel Loeto attributed the outcome to strategic investment decisions undertaken during a difficult operating environment.
“The reason we had that income was due to the net realised fair value gains. We transacted and were fortunate to make gains during those transactions. We sold a lot last year to be able to fund our consumption patterns. There was also P1.5 billion that was recognised on the sale of foreign exchange in 2025,” Dr Loeto presented.
His remarks suggest that the Bank capitalised on favourable opportunities in financial markets, converting investments into realised gains at a time when many institutions were grappling with heightened uncertainty and fluctuating asset prices.
PAPER LOSSES
However, the strong earnings did not come without setbacks. “We also experienced, as at the end of 2025, a P2.9 billion reduction due to losses that we got from the market but those losses were unrealised, meaning no transactions took place,” he added.
The distinction between realised and unrealised losses remains central to understanding the Bank’s financial position. Dr Loeto explained that international financial reporting standards require institutions to recognise market movements in their income statements regardless of whether assets have actually been sold.
Yet BoB maintains a more conservative policy when it comes to distributions, recognising only gains that have been genuinely realised through completed transactions.
UNDERLYING STRENGTH
“When we look at that aspect, in this P5.2 billion, there were unrealised market losses, meaning prices have gone against us in the market to the tune of P2.9 billion. However, we still have those assets in our balance sheet. We take that loss of P2.9 billion, by so doing we are increasing that P5.2 billion because it has been depressed by those losses on assets that we are still holding. This P5.2 billion, including unrealised market losses, then takes away the losses because we are still holding the assets, this then takes that P5.2 billion to P8.1 billion,” he elaborated.
In essence, the P2.9 billion decline reflects paper losses rather than cash losses. The assets remain in BoB’s possession and could recover in value over time. Excluding those temporary market swings, the Bank’s underlying operational and investment performance would effectively amount to P8.1 billion.
Dr Loeto underlined that the results highlight not only prudent reserve management but also the resilience of Botswana’s central bank in preserving value and generating income amid one of the most unpredictable global financial environments in recent years.