- Bank reports sharp earnings decline as higher funding costs weigh on performance
GAZETTE REPORTER
Botswana Savings Bank (BSB) recorded a significant decline in profitability for the financial year ended 31 March 2026, as liquidity pressures across the financial sector, rising funding costs and reduced lending activity weighed on its financial performance.
The results were announced in the bank’s financial statements by Deputy Chairperson Emmanuel Kgantumo and Acting Chief Executive Officer Dr. Wabo Moswate, who described the period as a strategic transition year following the completion of the Lesedi Strategy (2022–2025).
The Board approved the transition year to consolidate the gains achieved during the transformation journey, while ensuring that investments made during the strategy period translated into sustainable institutional capability.
“The transition year was intended to embed the capabilities developed during the strategy period, optimise the benefits of the bank’s transformation initiatives and position the institution for its next phase of strategic growth,” they said said in the Bank’s financials.
Profit decline
BSB reported a profit after tax of BWP 0.4 million for the year under review, compared with BWP 76.8 million recorded in the previous financial year.
The bank attributed the sharp decline primarily to elevated funding costs caused by persistent liquidity pressures, which compressed margins and affected overall financial performance.
“While the year’s financial results were constrained by liquidity challenges and rising funding costs, the bank remained focused on preserving financial stability, enhancing operational efficiency, and positioning itself to capitalise on future growth opportunities,” Kgantumo and Dr. Moswate said.
Net Interest Income (NII), a key measure of banking performance, declined to BWP 234 million from BWP 312 million in the prior year.
The reduction was linked to higher funding costs and a moderate contraction in the loan book. Net loans and advances decreased to BWP 4.0 billion from BWP 4.4 billion, reflecting subdued credit demand and prudent risk management.
Income pressure
Non-funded income also declined during the year, falling to BWP 12.7 million from BWP 60.3 million.
The bank said the decline reflected lower transactional volumes, reduced fee-based activity and weaker subsidiary performance. Commission revenue from credit life premiums was also affected by limited growth in the loan book.
BSB’s funding base contracted during the period, with customer deposits declining to BWP 3.96 billion from BWP 4.08 billion.
Despite the decline in deposits, the bank improved its liquidity asset ratio to 20 percent from 11 percent in the previous year, supported by deliberate liquidity preservation and prudent balance sheet management.
The capital adequacy ratio stood at 15.9 percent, reflecting continued compliance with regulatory requirements and a focus on risk management.
Future strategy
Looking ahead, BSB said it would focus on resilience, disciplined execution and long-term sustainability as it enters a new strategic cycle guided by the Pinagare Strategy.
“The bank remains committed to delivering sustainable value to its shareholder, creating meaningful impact for customers and communities, and strengthening its position as a trusted financial institution,” they said.
The bank maintained that the challenges experienced during the year had reinforced the importance of prudent risk management, operational efficiency and sustained stakeholder confidence.