Transcript Slide 1

A Brief Overview of
Bank Credit in
Botswana
Keith Jefferis
BIFM/FinMark Forum
Gaborone, October 27th, 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%)
 Household credit now around
61% of total credit
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
 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
 Most dramatic growth has
been in unsecured (payroll)
loans
 No recent growth in vehicle
loans
 Steady growth in mortgages
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
 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
 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
Thank You