FNBB’s profit climbs 12% amid persistent credit challenges

**FNB Botswana has reported a 12 percent rise in profit, reaching P2.117 billion for the financial year ending June 2026, despite ongoing pressures from impairments, high funding costs, and subdued credit demand. **

The bank’s total income grew 13 percent to P4.226 billion, buoyed by a 30 percent increase in non-interest revenue, while net interest income edged down two percent to P1.912 billion. In light of these results, FNB declared a dividend of 30 thebe per share, positioning itself for continued growth in a challenging economic climate.

Acting Chief Financial Officer Orapeleng Senwelo attributed the strong performance to the bank’s resilience and robust balance sheet. “Sustaining business over 35 years, while maintaining market leadership for the past 15, is no small feat. It speaks volumes about the trust our franchise has built,” Senwelo said. He noted that the 12 percent growth in earnings reflects well-protected shareholder capital despite a tough operating environment. “Competition remains fierce, and the economic recovery is slower than expected,” he added.

The bank’s income statement revealed a slight dip in net interest income, from P1.951 billion to P1.912 billion, driven by a sharp rise in interest expenses – from P533 million to P981 million. Meanwhile, non-interest revenue jumped from P1.780 billion to P2.314 billion, lifting total income from P3.732 billion to P4.226 billion.

Senwelo credited disciplined cost management for the results, with operating expenses increasing 8 percent to P1.918 billion; below the pace of income growth. “Controlling costs is critical to protecting the business. It requires ongoing tough decisions,” he said.

Pre-provision profit rose 18 percent to P2.308 billion, while the cost-to-income ratio stood at 45.4 percent. Return on equity was a robust 33.2 percent, underscoring strong profitability.

Yet impairments surged 159 percent, from P74 million to P191 million, highlighting mounting pressure on borrowers. The bank’s non-performing loan ratio increased to 3 percent. Senwelo said that while FNB remains confident in the quality of its credit book, it will continue to prioritize responsible lending. “We have to be very careful about where we extend credit,” he said. The bank plans to pursue opportunities in sectors such as tourism and government-backed public-private projects, while safeguarding its interests.

The balance sheet expanded 2 percent, with advances up 5 percent and deposits rising 7 percent. Senwelo noted that increased deposits from institutions and corporates strengthened the bank’s funding position. Liquidity conditions also improved toward the fiscal year’s end, supported by government borrowing and pension fund inflows.

Bogatsu, speaking earlier in the presentation, said the banking sector has remained resilient amid regulatory, economic, and technological pressures. He pointed to new legislation, the Employment Act, Cyber Security Act, Data Protection Act, and Critical Information Infrastructure regulations, that require ongoing compliance. He also warned of rising fraud attempts as digital banking adoption grows. “Our customers have been vigilant, but fraudulent activity continues,” Bogatsu said.

Consumer pressures have dampened transaction volumes, especially for electricity and airtime purchases, though digital migration is gaining ground. Swipe activity and app penetration have increased, with FNB encouraging customers to use cards, digital payment platforms, and self-service channels.

One tangible benefit for customers was the P45.4 million paid out in cashback rewards during FY26, a 9 percent increase. The bank sees this program as a way to share value with customers while boosting use of its digital platforms.

FNB also emphasized its broader shared-prosperity agenda, including financial inclusion, sustainable finance, local procurement, SME development, and social investment. The bank has financed nearly P1 billion through SME and economic inclusion initiatives and deployed about P2 billion in sustainable finance. Local procurement reached 91 percent, exceeding its 90 percent target. The FNB Foundation has invested over P100 million in community projects, including nearly P14 million supporting 923 young people, of whom around 544 have found employment or started businesses.

On financial inclusion, the CashPlus agency network facilitated nearly P50 billion in transactions, extending banking access beyond traditional branches. The bank also launched a Basic Account for customers who previously faced barriers to opening accounts, alongside new digital and business solutions such as WhatsApp banking and agricultural financing.

Questioning SME sustainability

The Weekend Post’s business desk pressed the bank on whether its support for SMEs and young entrepreneurs is fostering sustainable businesses or simply extending dependence on interventions.

Deputy Chief Executive Officer Dr. Mbako Mbo said SMEs remain vital to FNB’s growth strategy but urged a nuanced view. “SMEs fall into two categories: those still developing and not yet entrepreneurial, and those ready for commercial banking,” Mbo explained.

He said businesses needing intensive intervention belong in the development finance sector, where they can receive targeted support before transitioning to commercial banking. “Development finance institutions are doing good work graduating these businesses into the commercial space,” he noted. Mbo added that FNB’s SME support extends beyond financing, offering business development and psychosocial assistance.

Government borrowing seen as ‘crowding in’ private sector

WeekendPost also asked whether rising government borrowing might crowd out private-sector borrowers despite improved liquidity. Treasurer Mokgethi-Magapa described the current effect as “crowding in,” provided the borrowing funds productive economic activity.

“My view is that government borrowing is bringing new money into the market, boosting liquidity and business confidence. This improves economic growth and infrastructure, encouraging businesses to expand and seek loans,” Magapa said.

He cautioned that the ultimate impact depends on how government uses borrowed funds, particularly whether spending creates opportunities for the private sector.

Despite solid earnings, FNB’s management acknowledged ongoing challenges. Inflation, unemployment, and high interest rates continue to squeeze consumers and businesses. Some corporate clients have refrained from tapping existing credit facilities due to borrowing costs, while retail credit growth has slowed amid shrinking household incomes.

FNB’s results paint a complex picture: profitability remains strong, capital and liquidity are sound, and non-interest income is growing rapidly. Yet rising impairments, elevated funding costs, and weak credit demand pose risks as the bank enters the new financial year. With a 55-year legacy in Botswana, FNB’s immediate challenge is maintaining momentum without compromising credit quality or its support for an economy still under strain.

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