NDB extends losses on industry headwinds
Pauline Dikuelo | Thursday December 15, 2016 18:00
The half-year loss compares negatively to a profit of P2.4 million recorded for the same period in 2015.
The bank attributed the loss to challenges in the banking industry with regards to increasing defaulters and tight liquidity.
NDB’s chief executive officer (CEO), Lorato Morapedi said further to this, the bank had to ensure adequate data clean up following the implementation of the new banking system.
For the reported period, net loans and advances and loan interest income reduced by 19% and 17% respectively. On the other hand, the bank managed to reduce expenditure by inculcating a cost saving culture. Other expenses were 25% lower than in September 2015.
“This has been achieved through consultation, education and automation resulting in cost containment and improved efficiencies,” she said.
Morapedi recently told the Public Accounts Committee that they are in talks with government over a P1-billion cash injection to keep the business afloat amid rising non-performing loans (NPLs). The troubled financial institution plans to present a restructuring plan shortly and hopes an improved balance sheet will put it in a better position for funding.
The CEO also further said the bank’s total assets decreased from P1.6 billion as at September 30, 2015 to P1.3 billion adding that the decrease was on the backdrop of contraction in loans and advances over the same period.
She noted that the bank has embarked on a turnaround strategy that is geared towards growing and improving the quality of the loan book adding that this will enhance return on investment.
Morapedi also stated that alternative sources of cheaper funding are necessary to improve the profitability of the bank and allow NDB to assist customers with affordable funding.
“While the bank continues to show signs of recovery from a profitability perspective, there is still a need to implement cutting edge initiatives to continue collecting from Non-Performing Loans and enhance the bank’s asset quality. It is expected that these interventions will improve the bank’s performance going forward,” she said.
Last year the bank adopted a three-year turnaround plan aimed at reducing the NPLs by 80% with a focus on collections as well as zero contamination on new disbursements.
The turnaround plan focuses on high yield products, re-capitalisation of the bank; 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.