First National Bank of Botswana Limited ( 2019 Annual Report

We have extracted the Chief Executive Officer’s Statement from the 2019 annual report for First National Bank of Botswana (, listed on the Botswana Stock Exchange:

FNB Botswana enjoys the service of dynamic, agile and innovative staff members who continue to make it possible for the Bank to remain competitive and to keep growing. We continue to introduce various programmes to stimulate their talent, meet their needs and make FNB Botswana an enjoyable place at which to work.


This year the Bank’s primary emphasis was on driving operational efficiencies. For much of the year we focused on ensuring that we are operating on a solid and stable platform through centralisation, process improvement and automation. We leveraged on our current capabilities, systems, infrastructure and innovation DNA to significantly improve efficiencies as well as enrich customer experience and value proposition.

The Bank focused on optimising services to existing customers. We sought to better understand customer banking needs, trends and behaviour, thereby allowing us to propose and offer products and services that speak precisely to their needs. This is evident from our improved vertical sales index (VSI), which shows that customers are taking up more products which meet their requirements and lifestyle.

FNB Botswana enjoys the service of dynamic, agile and innovative staff members who continue to make it possible for the Bank to remain competitive and grow. We continue to introduce various programmes to stimulate their talent, meet their needs and make FNB Botswana an enjoyable place at which to work. This is underpinned by our human capital strategy which focuses on talent management, employee wellness, promoting progressive thinking and achieving a work-life balance.

The Bank continues to leave footprints across the nation through our citizen economic empowerment strategy that aims to procure most products and services from citizen owned businesses, as well as the support we give to the youth through the FNB Botswana Foundation, which has re- aligned its mandate to focus on youth empowerment and skills development.


Negative pressures on the global economy continue to emanate from trade tensions between the USA and China, the increasing risk of a “no- deal” Brexit, mounting sovereign debt levels and rising income inequality. The International Monetary Fund (IMF) has cut its global growth forecast for 2019 to 3.2% (3.6% in 2018), the lowest level since the financial crisis. Eurozone growth is expected to remain subdued while forecasts indicate slower US growth as the impact of fiscal stimulus dissipates and previous interest rate hikes weigh on demand. The current trade tensions are likely to constrain prospects of a recovery fuelled by China’s fiscal stimulus feeding into emerging market economies. Developed market inflation, most notably in the USA, remains low. Accordingly, when combining this with risks to the growth outlook, the US Federal Reserve has signalled a policy of supporting the economy with low interest rates. The same conditions have also prompted other central banks in developed markets to defer any plans for tightening of monetary policies, with a resultant increase in US Dollar strength.


The IMF forecasts that growth in sub-Saharan Africa (SSA) will rise marginally from 3% in 2018 to 3.5% in 2019. This growth should be supported by higher investment spending which could partially offset relatively low industrial commodity prices. The expansion rates of the South African and Nigerian markets remain well below their long- term averages, constraining SSA growth.

The Nigerian economy is expected to grow below 3% over the next two years, and the South African economy, which contracted 3.2% quarter-on-quarter in the first quarter of 2019, is expected to grow by no more than 1% in 2019, specifically with the drag of the large state owned enterprises (SOEs). With both Nigeria and South Africa having recently cut their repo rates, several other SSA economies are expected to follow suit, which in turn should encourage investment in sustainable opportunities and developmental projects.


The domestic economy is expected to register growth of 3.9% in 2019 and 3.7% in 2020, underpinned by the services sector contributing over 40% of the growth, led primarily by investments in transport and communications, trade and finance, and business services. However, this growth is likely to be constrained by limited output and export-oriented activities in view of the lack of robust private sector investments needed for economic diversification to reduce dependence on diamond revenues.

At 17% of GDP, mining remains the second highest contributor to growth and is expected to contribute an average of 30% of fiscal revenue over the next three years. This continued reliance on mineral exports, and on diamonds in particular, poses a risk to the country’s economy, especially during subdued global growth and plateauing commodity prices. The manufacturing and agriculture sectors continue to underperform with a combined contribution of around 7%. Any unfavourable climatic conditions in the context of global warming will further weigh on agricultural output, and as yet the opportunities for sustainable manufacturing remain largely unidentified.Household expenditure makes up almost half of the country’s GDP and is expected to increase slightly above GDP growth levels in the forecast horizon. While the recent government salary adjustments will support growth, it may not be sufficient to fully compensate for pressures on household disposable income arising from a lack of employment opportunities.


Performance for the year was steady with a 13% improvement in profit before taxation (PBT). The balance sheet improved by 5% year-on-year to P26.3bn.

Credit Extension

The Retail book improved by 7% year- on-year, despite the consumer still being under considerable pressure and our consequent cautious approach to consumer lending. We have also seen pressure on the Commercial book which declined by 7%. The Corporate book saw good opportunities in the retailer space as well as in financial institutions, resulting in advances growth of 9%. The WesBank book grew by 9% against market growth of between 4% and 5%. This growth was driven by an 11% growth in the Retail book and 6% in the Commercial book.

The Bank has restructured the WesBank operating model and in the new financial year, the business activities will be reported under the Retail and Commercial segments. While we believe that the market is recovering to some extent, we have certainly seen a shift in the credit extension space from retail to business. This highlights the fact that business confidence in Botswana is improving and businesses are finding growth opportunities, which is likely to have a positive impact on employment going forward.


There was continued stability in the banking sector and as a result the sector has enough liquidity to meet customers’ borrowing needs. The cost of funds remained flat during the period, and the Bank focused on activities that improve the balances of call and current accounts.


During the year under review we did not experience any substantive operational risks. As part of our efficiencies strategic focus, we reviewed our credit processes, structures and systems. This resulted in improved collections and reduced NPLs throughout the business, particularly in the Retail Segment and lower Commercial Segments. The Bank will continue with its prudent approaches to lending.


There were some changes to the regulatory environment during the year, and the vigilance around Know Your Customer (KYC), anti-money laundering and terrorism financing remained a focus for all regulators. The biggest risks are in cash transactions as the source of funds is more difficult to trace. FNB Botswana continues to lead the drive towards a totally digital banking environment that would obviate the risks associated with cash deposits.


Our customers remain at the centre of the solutions we provide. We have been deliberate in our ongoing commitment to continually improve customer service by availing additional channels that are relevant to our customers’ day-to- day activities and which provide digital solutions that reduce the need for customers to visit the branch. Several products that are geared towards further simplifying and streamlining the customer experience were launched in the 2018-19 financial year, including

  • A simplified Cashback Rewards programme which converts eBucks rewards to Cashback Rewards, encouraging customers to adopt banking behaviours aligned to the digital migration strategy. The programme replaced eBucks and allows customers to convert their rewards to cash
  • FNB Botswana set up WiFi at all branches which is accessible for free to all customers, making it easier for customers to migrate to our digital platforms
  • FNB Insurance Agency (FNIA) launched a Retrenchment Cover policy for personal loans, mortgage loans and WesBank auto loans, cushioning customers against losing their assets in the case of retrenchment.

There has been a marked increase in uptake of digital solutions, particularly online banking, and this demonstrates the success of our digital migration strategy.


Current activities at Orapa and Jwaneng mines present opportunities in the mining and related industries and we will continue to monitor developments in the diamond market. The economy continues to diversify, and we believe that there are encouraging signs of growth in the tourism sector as well as opportunities arising from Special Economic Zones, set aside by government to promote economic diversification. From a consumer perspective, the recent government salary increase is expected to reduce pressure on disposable income. We will continue to implement our 3-year customer centric strategy, termed Vision 2020, which we developed in 2017, with the primary objective of focusing on initiatives that put our customers at the heart of all that we do.

As we rapidly approach the end of the strategy, we will reflect and take stock to ensure that all the initiatives of the last 3 years have had a positive impact on our customers’ banking experience and that we have stabilised our banking platforms in preparation for the future.


I express my deep gratitude to all staff members and say thank you for a year of continued hard work, dedication and commitment to serving our customers. FNB Botswana would also like to sincerely thank our customers. We appreciate your continued loyalty and trust.

I would also like to thank the Chairman and the Board of Directors for their strategic leadership and the FNB Botswana Executive Management team for their tenacity and support.

Last, but not least, I would like to thank you, the Shareholders, for your continued confidence in FNB Botswana. I am confident that the Bank will continue to provide you with a reliable and profitable return on your investment and look forward to robust financial performance going forward.

Steven Lefentse Bogatsu
Chief Executive Officer