Community Contributor | Jul 3, 2018 | 0
Development Bank presents lukewarm full-year results
The Development Bank of Namibia has seen a 51% slump in profits from 2010 to 2011 despite an increase in the volume of transactions.
For the financial year ended 31 December 2011, the Development Bank made a profit of N$35 million down from N$72 million in 2010. The decline in profits is mainly attributed to a rise in impairments, a 15% increase in operating costs and lower interest rates which fell from an average of 11.25% in 2010 to an average of 9.75% last year.
Outgoing CEO David Nuyoma is, however, confident that much of the impaired accounts will be reversed this year.
He said: “Management is confident that much of these impaired accounts will yield during the course of 2012 primarily as a result of payment cycles that delay remittances to the bank. This is particularly the case with Bridging Finance Facilities where clients received payment late for completed tenders.”
Nuyoma argued that the achievements of 2011 should be seen against the background of global economic strain as well as volatility and uncertainty particularly experienced in the Euro zone.
Despite the setback, the bank’s loan book and equity portfolio grew by close to 40% resulting in total advances of N$ 1.35 billion at the end of 2011. Nuyoma said this was in line with the targets set.
He also said the bank remains sustainable and aligned to its overall strategy and mandate following the introduction of a management and planning model known as the Target Balance Sheet Framework.
“The target balance sheet approach aligns the bank’s operations with its mandate. It identifies which investments will best support the bank’s mandate and in which proportions so that the bank can determine how its activities should be managed sustainably. The full impact of this initiative will be realised during the course of 2012 and the following years,” Nuyoma said.
The bank said it has now placed emphasis on project identification while financing projects and sectors where there is not enough economic activity.
“The strategy also involves analysis of the sectors with the greatest impact on the bank’s loan book growth and quality,” Nuyoma added.
At 36% the construction sector dominated the SME loan book during the last financial year but going forward Nuyoma said greater emphasis will be placed on key strategic areas that will realise a significant development impact.
“Increasingly, DBN will prioritise projects with an enduring development impact, as this is how it can contribute to change and make a meaningful difference in people’s lives,” he said.
The key sectors benefiting in 2011 included agriculture and fishing, business services, financial services, infrastructure, manufacturing and commerce, and transport and communication.
Through the projects 1,425 new and 1,999 temporary jobs were created, while 2,466 jobs were retained.