The Development Bank of Namibia (DBN) has released its annual results for the 2015/16 period indicating that the bank’s loans and advances grew to N$3.8 billion, while its assets grew to N$4.59 billion.
The bank amended its reporting period from the end of the calendar year to the end of March 2016 to coincide with the financial year of its shareholder, the government. The annual report for 2015/16, therefore, covers a 15-month period, and standard 12-month reporting will be resumed in 2017.
During the period DBN loans and advances grew to N$3.8 billion at March 31, 2016, up from N$2.3 billion in 2014. The growth is primarily attributable to the increased scope and larger amounts approved per project.
Over the same period, net interest income grew from N$215.56 million in 2014, to N$339.78 million. Net income grew from N$147.25 million to N$208,76 million. The bank reapplies the majority of its net income to lending in the interests of development.
The bank maintained the quality of its loan and investment portfolio with bad debts for the period of 4.1 percent, below the maximum budget percentage of 5.0 percent. This falls approximately 30 percent below the recommended level of bad debt of 6 percent advocated by the Association of African Development Finance Institutions.
DBN’s assets grew to N$4.59 billion at 31 March 2016, up from N$2.92 billion at the end of 2014, an increase of 57.2 percent on the back of the high loan book growth.
During the period, the bank – in consultation with the shareholder – revised its lending and investment focus and ceased providing direct finance for small and medium enterprises, to focused on the provision of finance for infrastructure and to enterprises with an annual turnover of above N$10 million, as well as business projects valued at greater than N$10 million.
Talking about the shift in strategic focus, CEO Martin Inkumbi said this was prompted primarily by the mandate of the SME Bank to provide finance to smaller enterprises, but is also supported by a growing finance ecosystem of commercial lending activities, and specialist private funds which support SMEs.
The benefit to the bank, Inkumbi said, is that it can evolve into its new role as an impactful and effective financing agency for larger initiatives.
He added that the bank has put in place a sound risk management system which envisages the requirements for preservation and sound management of its own pool of capital, as well as capital entrusted to it by the shareholder, private sector sources and external agencies.
In terms of organisational development, Inkumbi said DBN is establishing an in-house treasury function to support its capital raising efforts and liquidity management. A post investment and loan monitoring function was created as part of DBN’s credit risk management function to ensure appropriate utilisation of the bank’s funds and to support ongoing risk management of enterprises and projects that the bank has invested in.
Inkumbi also said the bank has put in place an environmental and social management system, known as the ESMS, to mitigate harmful impacts that could emanate from the projects and business activities of enterprises it is financing. An environmental risk manager was appointed to oversee the function.
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