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A Brief Overview of Bank Credit in Botswana . Keith Jefferis BIFM/ FinMark Forum Gaborone, October 27 th , 2009. Total bank credit. Rapid growth in bank lending – averaging 16% a year over 2000-2008 Slowdown in 2009 Faster growth in credit to households (18%) than businesses (14%)

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a brief overview of bank credit in botswana

A Brief Overview of Bank Credit in Botswana

Keith Jefferis

BIFM/FinMark Forum

Gaborone, October 27th, 2009

total bank credit
Total bank credit
  • Rapid growth in bank lending – averaging 16% a year over 2000-2008
  • Slowdown in 2009
  • Faster growth in credit to households (18%) than businesses (14%)
  • Household credit now around 61% of total credit
bank assets vs loans
Bank assets vs Loans
  • Bank loans have increased steadily, but assets have increased faster.
  • Excess liquidity in banking system – lending not limited by supply of funds
  • Loan-to-deposit ratio has fallen, down to 50%, compared to 71% in 2004
household credit vs gdp
Household Credit vs GDP
  • Steady increase in the ratio of household borrowing from banks to GDP
  • Information on household incomes not available, but likely that the ratio of household borrowing to disposable income – a crucial indicator of indebtedness – has also risen sharply
  • Does not include borrowing from non-banks (e.g. microlenders, Letshego)
credit to households by type
Credit to households by type
  • Most dramatic growth has been in unsecured (payroll) loans
  • No recent growth in vehicle loans
  • Steady growth in mortgages
shares of hh credit
Shares of HH credit
  • HH credit growth being driven by unsecured (payroll) credit
  • Mortgages (property) has maintained a constant share
  • Vehicle finance has declined sharply
hh deposits vs credit
HH deposits vs credit
  • Over past decade household borrowing and deposits have moved in tandem – net borrowing from banks stable
  • In 2009 this has changed dramatically – net borrowing has jumped
  • Suggests HHs drawing on savings to maintain consumption - unsustainable
arrears
Arrears
  • Steady rise in arrears levels
  • Arrears on credit to HHs consistently higher than on credit to businesses
  • A further indicator of household income/debt stress