. 6 0. 3 0. 2 0. 3 finance and business services real estate 2. 5 2. 6 2. 3 2. 4 households 3. 1 3. 0 2. 8 22. 2 25. 0 21. 9 23. 8 retail credit3 16. 7 19. 1 16. 9 18. 3 mortgage 5. 5 5. 9 5. 1 5. 6 source : commercial banks, statistics botswana and bank of botswana calculations. notes : 1. although not shown in the table, electricity and water, other and nonresident subsectors are included in the business credit - to - gdp ratio. 2. data covering the twelve months to september 2022. 3. includes motor vehicle, personal and credit card loans. monetary policy statement february 2023 chart 3. 10 aggregate credit to gdp gap percent percent - 2 - 4 - 6 20 18 20 q1 q2 20 q3 q 20 4 20 q1 q2 20 q3 20 q4 20 q1 q2 q3 actual credit - to - gdp trend gap ( rhs ) source : bank of botswana 3. 23 the rate of growth of household deposits decreased to 8. 4 percent in december 2022, compared to 15. 8 percent in december 2021, while business deposits ( excluding parastatals ) increased by 11. 1 percent from 3 percent during the same period. overall, total deposits at commercial banks increased by 7. 8 percent, compared to 4. 7 percent growth in the prior year ( chart 3. 11 ). given the slower increase in bank lending than the increase in bank deposits, the financial intermediation ratio slightly decreased from 81. 7 percent in december 2021 to 80. 5 percent in december 2022, signalling the underutilisation of deposits as borrowing costs were elevated following monetary policy tightening by the bank and in an environment of subdued economic activity. chart 3. 11 : annual growth in business and household deposits at commercial banks percent - 5 business dec sep jun mar dec sep jun mar dec households jun sep mar dec jun sep mar dec sep jun mar - 10 total source : commercial banks 3. 24 overall, notwithstanding the challenges caused by the onset of the covid - 19 pandemic, vulnerabilities that could elevate risks to financial stability remain contained, as reported in the published october 2022 financial stability report. in particular, the financial sector was assessed to be resilient and characterised by strong capital monetary policy statement february 2023

##paired capital 7. 4 9. 2 8. 7 8. 8 8. 5 8. 1 specific provisions to npls 62. 8 45. 7 57. 6 56. 2 55. 1 54. 4 liquid assets to deposits ( liquidity ratio ) 3 21. 4 16. 6 16. 6 17. 4 18. 3 17. 1 advances to deposits ( intermediation ratio ) 81. 4 81. 9 82. 3 82. 3 79. 8 80. 4 return on average assets ( roaa ) 1. 6 1. 7 1. 9 2. 0 2. 1 2. 2 return on equity ( roe ) 15. 1 19. 2 21. 7 26. 8 26. 1 … cost to income 64. 9 63. 3 60. 5 60. 3 57. 2 56. 7 asset quality ( percent ) liquidity ( percent ) profitability / efficiency ( percent ) source : 1. 2. 3. bank of botswana. prudential lower limit is 7. 5 percent – basel ii / iii. prudential lower limit is 12. 5 percent. the minimum statutory requirement is 10 percent. monetary policy statement february 2023 3. 26 growth in broad money supply ( m2 ) was 10 percent in the year to october 2022, compared to 3. 9 percent in the corresponding period in 2021. the growth of money supply resulted from an increase in credit to the private and parastatals sectors to fund growth enhancing opportunities. meanwhile, there was, in part, an offsetting effect from the increase in net foreign assets and public sector deposits at the bank of botswana. by component, current account ( transferable ) deposits increased by 10. 1 percent, while interest bearing deposits increased by 10. 5 percent in the year to october 2022. deposits in foreign currency accounts increased by 38. 2 percent in the same period. the ratio of money supply to gdp ( a measure of financial deepening ) decreased to 42. 4 percent in the year to september 2022, compared to 48. 7 percent in 2021, signalling shortage of liquidity in the economy ( in the prevalence of covid - 19 base effects ). ( g ) 3. 27 output and price developments real gdp in botswana grew by 6. 4 percent in the twelve months to september 2022 compared to a growth of 8. 9 percent in the year to september 2021. the slowdown in output growth is attributable to the deceleration in production