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A Brief A Brief Overview of Overview of
Bank Credit in Bank Credit in Botswana Botswana
Keith JefferisKeith JefferisBIFM/FinMark ForumBIFM/FinMark Forum
Gaborone, October 27Gaborone, October 27thth, 2009, 2009
Total bank creditTotal bank credit
Rapid growth in bank Rapid growth in bank lending – averaging lending – averaging 16% a year over 2000-16% a year over 2000-20082008
Slowdown in 2009Slowdown in 2009 Faster growth in credit Faster growth in credit
to households (18%) to households (18%) than businesses (14%)than businesses (14%)
Household credit now Household credit now around 61% of total around 61% of total creditcredit
Bank assets vs LoansBank assets vs Loans
Bank loans have Bank loans have increased steadily, but increased steadily, but assets have increased assets have increased faster. faster.
Excess liquidity in Excess liquidity in banking system – banking system – lending not limited by lending not limited by supply of fundssupply of funds
Loan-to-deposit ratio Loan-to-deposit ratio has fallen, down to has fallen, down to 50%, compared to 71% 50%, compared to 71% in 2004in 2004
Household Credit vs Household Credit vs GDPGDP
Steady increase in the Steady increase in the ratio of household ratio of household borrowing from banks to borrowing from banks to GDPGDP
Information on household Information on household incomes not available, but incomes not available, but likely that the ratio of likely that the ratio of household borrowing to household borrowing to disposable income – a disposable income – a crucial indicator of crucial indicator of indebtedness – has also indebtedness – has also risen sharplyrisen sharply
Does not include Does not include borrowing from non-banks borrowing from non-banks (e.g. microlenders, (e.g. microlenders, Letshego)Letshego)
Credit to households Credit to households by typeby type
Most dramatic growth Most dramatic growth has been in unsecured has been in unsecured (payroll) loans(payroll) loans
No recent growth in No recent growth in vehicle loansvehicle loans
Steady growth in Steady growth in mortgagesmortgages
Shares of HH creditShares of HH credit
HH credit growth being HH credit growth being driven by unsecured driven by unsecured (payroll) credit(payroll) credit
Mortgages (property) Mortgages (property) has maintained a has maintained a constant shareconstant share
Vehicle finance has Vehicle finance has declined sharply declined sharply
HH deposits vs creditHH deposits vs credit
Over past decade Over past decade household borrowing household borrowing and deposits have and deposits have moved in tandem – net moved in tandem – net borrowing from banks borrowing from banks stablestable
In 2009 this has changed In 2009 this has changed dramatically – net dramatically – net borrowing has jumpedborrowing has jumped
Suggests HHs drawing Suggests HHs drawing on savings to maintain on savings to maintain consumption - consumption - unsustainableunsustainable
ArrearsArrears
Steady rise in arrears Steady rise in arrears levelslevels
Arrears on credit to Arrears on credit to HHs consistently HHs consistently higher than on credit higher than on credit to businessesto businesses
A further indicator of A further indicator of household income/debt household income/debt stressstress
Thank YouThank You