National Development Bank (NDB) is expecting to release its financial statements for the year ended 31 March 2014 any time from now after they have gone through the relevant governance approval structures.
The bank had recorded a lower financial performance than expected compared to the previous year (2012-13).
The Bank’s interest income increased by 8% from P202million in 2013 to P218 million.
Operating expenses increased by only 4% which is indicative of the Banks efforts to manage costs in an environment of increasing administration costs.
“In the midst of the tough economic environment in which the Bank is operating, characterised by a squeezed interest rate environment, the Bank continues to focus on the execution of its core development and citizen empowerment mandate,” explained Lorato Morapedi, NDB CEO.
Accordingly, Morapedi also mentioned that the Bank continues to support start-up businesses as well as agricultural projects, which are periodically affected by drought and livestock diseases and this significantly contributed to a sharp rise in impairments allowance, which mainly led to the Bank recording an operational loss amounting P86.4 million.
The CEO, further explained that despite the recorded subdued performance, the Bank remains strong as indicated by an increase in asset base at 11.6% (P1.58 Billion compared to P1.4 Billion in March 2013), Loans and advances increased by 9.81% (P1.3 Billion compared to P1.2 Billion in March 2013).
Furthermore, she mentioned that during the 2013-14 financial year, the Bank implemented some major projects which required significant cash outflows.
These include procurement and installation of the new integrated banking system mentioned above, branch office refurbishment, re-branding exercise and the organisational structure realignment exercise, which were all necessary as the Bank now embarked on a major transformation exercise which will see the national asset transformed into a fully-fledged commercialised and privatised entity.
Morapedi further explained that the completion of this audit was delayed mainly due to the migration to the new integrated Banking System which required a detailed audit between the old system and the new system impacting on time lines for production of the March 2014 financial results.
She further reported that due requests for extensions were approved at different governance structures and that all key stakeholders were accordingly updated throughout this process.
She was swift to mention that as part of the recovery plan the Bank has developed and launched a turnaround plan which focuses on (1) reduction of non-performing loans through integrated activities including a robust collections campaign, (2) increase gross interest income, (3) improving organisational performance and (4) balance sheet optimisation initiatives.
“All these initiatives are expected to improve operational and financial performance of the Bank and they are the right building steps towards commercialisation and privatisation of the Bank,” said the CEO.