16th September 2025
Sello Motseta
ABSA’s Corporate and Investment Banking (CIB) experienced a difficult half-year, with total income lower by 14%, reflecting the impact of liquidity constraints and competitive funding dynamics that reduced deposits and muted non-funded income.
Corporate banking loans and advances to customers delivered a resilient performance, growing 9% in a constrained market.
“Markets’ performance was subdued, impacted by muted customer and client activities given the challenging economic environment,” said Keabetswe Pheko-Moshagane, Managing Director of ABSA during the release of the banks financial results.
She said, “Despite this performance, Corporate and Investment Banking (CIB) remained resolute in customer engagement initiatives, focusing on educating customers on Risk Management Products to enable them to mitigate risks in a volatile environment.”
A successful initiative during the current economic downturn has been the automation of SME account opening in Business Banking, delivering straight-through processing, improved onboarding and turnaround time, as well as promoting a more seamless customer experience.
“Our ongoing investments in digitisation and automation are central to enhancing customer experience and driving greater customer-centricity. These efforts are also accelerating digital adoption, which is expected to gradually reduce reliance on traditional physical channels,” said Pheko.
These efforts have started bearing fruit, evidenced by RBB digitally active customers growth of 22% year-on-year, while CIB adoption is over 90%. over P1 billion in revenue for the first half of the year, supported by prudent credit risk management aligned to the evolving market volatility.
While ABSA has absorbed much of the cost pressure relative to the negative broader local economic environment prevailing at present, the unfavourable contextual framework has contributed significantly to a 27% decline in profit before tax.
However, the bank says it is starting to see early signs of recovery with GDP contraction of 0.3% in the first quarter of 2025, a notable improvement from the 5.2% decline in Q1 2024.
Headline Inflation remained below the 3% lower objective rate of Central Bank, averaging 2.4%, reflecting moderation in food and fuel costs coupled with reduced power tariffs.
The Bank of Botswana maintained an accommodative stance on the Monetary Policy rate at 1.9%, in an effort to stimulate economic activity.
“Fiscal pressures remained evident, with softer mining revenues, particularly from diamonds, elevating public debt up to 28% of GDP in the first quarter of 2025,” said Pheko.
Despite a decline in Botswana’s foreign reserves, import cover remained stable at 5.9 months, reflecting the effectiveness of the Government’s response measures.
Managing credit risk effectively has been a key priority for ABSA, with senior bank officials keen to highlight the progress made in this area in the past few years despite the difficulty of the trading environment.
In 2022, impairments were elevated, reflecting pandemic-related pressures still running off the book. Our impairment to pre-provision profit ratio stood at 42%.
By 2023, this ratio improved considerably to 11%, as we took decisive steps to strengthen our credit risk management practices, and we saw releases due to overall portfolio performance.
In 2024, we further improved this metric to just 1%, reflecting our proactive management of credit risk and a disciplined approach to lending. The loan loss ratio remained well within risk appetite at about 0.5%.
“This continued into the first half of the year where the loan loss ratio remained below 1% despite increased charges compared to H1 2024,” said Kudakwashe Mukushi, ABSA Finance Director.
He said, “While impairment charges remained elevated due to prevailing economic pressures, we are confident that our proactive risk management approach and prudent provisioning positions the Bank well to absorb shocks and support long-term asset quality.”
Customer deposits increased by 3% to P18.9 billion, reflecting continued client trust and retail deposit mobilisation strategies. This is despite the challenging market liquidity environment which continues to prevail. Customer loans and advances increased by 6%, reaching P18.1 billion — a clear sign of ABSA’s commitment to supporting individuals and businesses with the funding needed.
