15 Sep 2016

National Development Bank (NDB) chief executive officer, Ms Lorato Morapedi says the bank needs additional funding to boost its operations, profitability and operational efficiency.

Appearing before Parliamentary Committee on Statutory Bodies and Enterprises recently, Ms Morapedi informed the committee that as a result of the macro and micro economic effects, 38 per cent of the bank’s loan book fell into non-performing loan status, negatively affecting its liquidity position.

She nevertheless stated that in order to improve performance of the portfolio, the bank has intensified collections efforts and cost containment strategies.

She therefore said in order to grow the loan book, there is need for funding support, saying government support has been requested in the form of capital injection and subsidised funding. She said they need close to P1 billion.

Ms Morapedi stated that the bank is still recovering from the effects of the huge impairments experienced in 2014, but is on a positive route to recovery as evidenced by the reduction in loss from P87 million to P48 million.

Giving a brief summary on financial performance for period ending March 31, 2015; Ms Morapedi mentioned that in the midst of the tough economic environment in which the bank was operating, NDB’s continued support of start-up businesses as well as agricultural projects, which are periodically affected by drought and livestock diseases, has resulted in its profitability declining over the years. She said, that coupled with the highly competitive environment has not spared the bank from the industry hardships.

She mentioned that the bank has in the backdrop of the challenging businesses environment experienced an increase in loans and advances by five per cent at P1.37 billion compared to P1.30 billion in March 2014. She explained that interest income increased by 6.7 per cent from P214 million to P228 million.

Ms Morapedi stated that the bank recorded a total loss of P48.4 million as compared to P87.8 million in the previous year.

She said during the period, overall comprehensive loss was P56.9 million from P69.2 million in the previous year, adding that impairments charges for March 2015 were reduced by 48 per cent when compared to the previous financial year figures, saying it is an indication of recovery. 

Ms Morapedi pointed out that the bank has implored a turnaround strategy which focused on income generation, containing costs and reducing non-performing loans was put in place to ensure its returns to profitability and operational efficiency.

To further improve the performance of the bank, she mentioned that they will focus on non-performing loans, investing in high margin portfolios, increased staff productivity, operational efficiency and profitability.

In addition, she mentioned that alternative sources of cheaper funding are necessary to improve the profitability of the bank and allow it to assist customers with affordable funding.

Regarding the achievements, Ms Morapedi reported a reduced loss of P56.9 million compared with P86.4 million in the previous year.

She also mentioned an increase in loan book from P1.30 billion to P1.37 billion.

She stated that they have managed to stabilise the newly implemented core banking system and started realising benefits in the form of; improved KYC information checks and enhanced monitoring on new disbursements.

Meanwhile, on the background of NDB, Ms Morapedi stated that it was established in 1963 through an Act of Parliament as a Development Financial Institution (DFI) mandated to provide financial products and services that promote the economic development of the country.

As part of its developmental mandate, she said NDB took a conscious decision to focus on agriculture and small scale medium enterprises to support government’s agenda on food security, employment creation and empowering Batswana especially those with difficulty in accessing funding from commercial banks. 

They are also involved in implementing initiatives that promote entrepreneurship and economic citizen empowerment especially among those with difficulty in accessing funding. ENDS