NDB seeks P400m cash injection
Isaac Pinielo | Friday September 16, 2016 15:52
In a presentation to the Parliamentary Committee on Statutory Bodies and Pubic Enterprises, NDB chief executive officer, Lorato Morapedi said due to the macro and micro economic effects, 38% of the bank’s loan book fell into non-performing loans status.
She said this negatively affected the bank’s liquidity position, noting that in order to improve performance of the portfolio, there is need for funding support.
She added that government support has been requested in the form of capital injection and subsidised funding.
According to Morapedi, the bank is still recovering from the effects of the huge impairments experienced in 2014. In spite of that, she noted that the bank is on a positive route to recovery as evidenced by the reduction in loss from P87 million to P48 million.
To further improve the performance of the bank, she said, focus is on the non-performing loans, investing in high margin portfolios, increased staff productivity, operational efficiency and profitability.
She also stated that alternative sources of cheaper funding are necessary to improve the profitability of the bank and allow the bank to assist customers with affordable funding.
“During the financial year ended March 31, 2015 the bank was faced with challenges including non-performing loans book, tight liquidity, high cost of funding, tight profit margins, over borrowed customers, and slow recovery of the economy,” said Morapedi.
As part of the interventions put in place, the bank adopted a three-year turnaround plan in 2015, aimed at reducing non-performing loans by 80% with a focus on collections, as well as a zero contamination on new disbursements.
“The bank intensified collections efforts and cost containment strategies to grow the loan book,” she said.
She said the turnaround plan focuses on high yielding products, re-capitalisation of NDB, data clean up, mid-long term privatisation and commercialisation. It also focuses on a new business model to be approved by the Ministry of Finance and Development Planning before a banking licence application.
Morapedi noted that this will be a potential enabler for more efficient banking through product development and improvement, and give the ability to widen banking services to the unbanked and rural communities.
“Our vision is to become Botswana’s number one development financial services partner by providing innovative financial products and services, which promote the economic development of Botswana,” she said.
NDB’s head of finance, Thandisa Sekga told the parliamentary committee that a turnaround strategy, which focused on income generation, containing costs and reducing non-performing loans, was put in place to ensure the bank returns to profitability and operational efficiency.
“The bank experienced an increase in loans and advances by five percent (P1.37 billion compared to P1.30 billion in March 2014), whereas interest income increased by 6.7% from P214 million to P228 million,” she said.
Notwithstanding growth reported in the balance sheet, Sekga said, the bank recorded a total loss of P48.4 million compared to P87.8 million in the previous year.
During the period, overall comprehensive loss was P56.9 million from P69.2 million in the previous year.
Impairments charge for March 2015 reduced by 48% when compared to the previous financial year figures. This is an indication of recovery.