Bank Gaborone shifts strategy
Bank Gaborone is shifting its funding strategy towards retail deposits after higher costs associated with institutional funding squeezed its margins during the year to 30 June.
The Botswana lender, part of Namibia-based Capricorn Group, said its net interest margin fell to 2.8% from 4.29%, while net interest income declined by 40.2%.
It attributed the pressure to tight liquidity in Botswana, which increased the cost of institutional deposits and created broader funding challenges.
Bank Gaborone said it was responding by seeking to grow retail deposits, diversify its funding sources and improve access to lower-cost liquidity.
The changes form part of a strategic reset aimed at strengthening the bank's capital position, restoring margins and improving credit quality, the report said.
The bank's gross loan book fell to P7 billion (about N$8.49 billion) from P7.69 billion (about N$9.3 billion), while its share of Botswana's lending market declined to 7.9% from 8.5%.
Non-performing loans rose by 65.7%, while impairment charges increased by 91.5%.
Despite the pressure, the bank prioritised liquidity stability over short-term profitability, according to the report.
Capricorn Group also approved a P80 million (about N$96.8 million) capital facility that could be drawn if Bank Gaborone experienced a capital shortfall. No funds were drawn during the year or after the end of the reporting period.
Bank Gaborone said liquidity conditions in Botswana had begun to improve and funding costs were moderating.
The bank has 12 branches and 27 ATMs in Botswana.
