NDB struggles with loan repayments
Isaac Pinielo | Friday September 29, 2017 10:31
NDB chief executive officer, Lorato Morapedi told the media recently that for the year 2016/17 the actual collections were P115.8 million against a target of P210 million.
She said during the period, the bank disbursements were P122 million against a target of P210 million, noting that they have since slowed down on disbursements while focusing on the turnaround plan, which included reduction of non-performing loans.
“This negative variance affected loans and advances growth and expected interest income declined by 16%,” she said.
In view of the persistent challenges, which were imminent during the year, Morapedi said the bank then prudently provided for a higher impairment charge for the year ended March 2017.
She said the effect of this intervention therefore increased impairments to P184 million from P60 million in the previous year leading to a total loss of P168 million.
“NDB will continue to pursue recoverability of these loans through a revised collection and recoverability structure,” Morapedi said.
She added that the bank reviewed the lending regime to minimise portfolio risk, like minimising exposure on the agriculture sector.
She noted that the impact of the intervention would result in the improved loan book and improved profitability. Meanwhile, the bank’s net loss for the period ended March 31, 2017 has increased from P21.2 million to P168 million while interest income decreased by 16% from P222.1 million to P186 million in March 2017.
The bank’s total assets grew by 5.9% to P1.44 billion from P1.36 billion in March 2016. Gross loans and advances dropped by 8.17% to P1.48 billion from P1.62 billion in March 2016.
Late last year, the bank management revealed to a Parliamentary Committee on Statutory Bodies and Pubic Enterprises that it was in talks with government to ask for a cash injection totalling P1 billion in the form of a three-year funding plan of P400 million in the first year, P165 million in the second year and P250 million in the third year, which was expected to be funded through different options.
“These options include, capital injection and subsidised loan facilities from government, of which a request of P400 million has already been submitted to government as well as government guarantees and open market borrowing and others,” the bank had said.