First National Bank (FNB) anticipates challenging operating environment next year following the recent increased interest rate which will limit the scope of credit growth. Recently the central bank increased the interest rate to 2.65 percent due to rising global commodity prices and inflation.

FNB CEO, Steven Bogatsu pointed out in the bank's 2022 annual report that although banks benefit from higher interest rates, this is offset by higher credit risk. " From a funding perspective, we are operating in a highly competitive market. Total advances to customers increased by eight percent to P16.1 billion and our market share remained stable, increasing slightly from 22 percent to 23 percent. “Our responsible approach to lending kept impairments in check despite the financial challenges faced by many of our customers.”

He said rising interest rates and costs, combined with job losses, will increase the pressure on consumers and small businesses and may result in an increase in loan impairments. “Our deposits are also likely to be impacted by the outflow of pension funds which were restricted from international markets while Botswana was on the Financial Action Task Force list of countries with strategic AML/CFT deficiencies (Botswana’s grey listing was lifted in October 2021). Increasing competition for banking customers and skilled talent compound these external risks.”

He said in the coming year the bank will have an opportunity to secure and grow its SME customer base as they have a strong appetite for SME lending. The bank will also increase investment in IT as we roll out the new single-view banking platform.

Bogatsu said they also have a plan to invest more in creating collections capacity. “As we enter a new year, I am confident that we have the people, culture, and strategic focus to maintain growth momentum and defend our leading position.”

FNB Chief Financial Officer, Luke Woodford said the bank continues to apply a cautious approach to lending to ensure responsible and manageable consumer exposure. “This is evidenced by the gross customer advances growing at a similar pace to the market. The gross customer advances increased by eight percent while the market gross advances rose by seven percent.”