In the first half of 2025, Absa Bank Botswana’s core engine—retail and business banking— proved it can attract more customers and diversify income for shareholders. But higher costs and rising bad loans owing to challenges in the economy meant that less of that growth is flowing through to profit after tax.
The bank’s total profit after tax fell to P319.7 million in the first half of 2025, a 25% drop from the previous period. The Corporate and Investment Banking division was hit hardest, with profits down 31%, while Retail and Business Banking also saw a decline, falling 21.8%.
Read: Why Absa Paused Dividend Pay
Absa Bank Botswana has two main engines driving its business:
- Retail and Business Banking (RBB): serving individuals and small-to-medium businesses.
- Corporate and Investment Banking (CIB): serving bigger companies, large projects, and trading activities.
This side of Absa is the star performer.
- Income rose: RBB brought in P839 million, up from P791 million last year.
- Loans earned P563 million (up from P541 million).
- Fees and commissions earned P253 million (up from P224 million).
That means most of Absa’s topline comes from ordinary customers and SMEs—75% of total income, compared to 70% a year ago.
During the results presentation, Absa’s Managing Director, Ms. Keabetswe Pheko-Moshagane, was upbeat:
“This shows tangible progress in diversifying revenue streams.”
She explained that growth came from:
- New products like the Absa Mobi Tap have helped bring in more small businesses.
- Over 300 new customers onboarded in six months.
- Loans to SMEs up 13%, helping them manage money “pressures and invest in future growth.”
- Even sponsoring the Summer Kids Marathon was linked to business strategy—driving youth savings and growing financial literacy.
As a result, customer transactions in this segment grew 14%, according to Ms Pheko-Moshagane.
But here’s the catch:
Bad loans ate into earnings.
Expected credit losses—the money the bank might not get back from loans—rose to P58 million. According to Finance Director Mr. Kudakwashe Mukushi, almost all of this came from households, which accounted for P55 million. This figure must be recorded in the bank’s financial statements. And when that number rises, it eats into earnings, leaving less money for investors.
Mr Mukushi also said:
“Because of the liquidity challenges, some of our smaller businesses are beginning to struggle.”
Money challenges was felt by small business:
- Business banking deposits fell 19% as companies dipped into savings to pay bills.
- Delayed payments from the government to suppliers also made the squeeze worse.
Retail and business banking operating costs ballooned to P473 million (from P387 million).
Bottom line:
- Profit before tax fell to P278 million, down from P375 million.
- After tax, profit came in at P223 million, down from P285 million.
While revenue was growing, shareholders reported less of it in profits.
CIB: A Different Strain
CIB faced the opposite problem: income shrank at the source.
- Total income fell to P287 million, down from P331 million last year.
- Net interest income dropped to P190 million (from P220 million).
- Fees and commissions nearly halved, to P13 million (from P23 million).
- Trading income softened to P83 million (from P88 million).
As Ms. Pheko-Moshagane put it:
“Liquidity constraints and a competitive funding dynamic reduced our deposit base and muted our non-funded income in the CIB segment.”
Non-funded income is the money banks make from fees and charges on services, not from lending. If customers keep less money in the bank, there’s less activity on their accounts, which means the bank earns fewer fees. CIB deposits declined from P7,582 billion to P7,465 billion.
CIB also faced:
- Expected credit losses rose to P8 million (from P5 million).
- Expenses ticked up to P144 million (from P139 million).
Result:
- Profit before tax slid to P134 million, down from P188 million.
- Net profit dropped to P98 million, from P143 million, a 31% decrease.
Related: Absa Seeks Cheaper Money as Shareholders’ Profits Decline
