NDB posts P87m loss on high impairments

NDB CEO: Lorato Morapedi
NDB CEO: Lorato Morapedi

The National Development Bank(NDB) has said it expects to record a loss of P86.4 million for the financial year ended March 2014 on the back of huge impairment charges.

In a statement released on Friday, CEO Lorato Morapedi said that despite the expected loss, the bank registered growth in interest income, assets and advances. According to Morapedi, interest income increased by eight percent from P202 million in 2013 to P218 million.

“Operating expenses increased by only 4 percent which is indicative of the Banks efforts to manage costs in an environment of increasing administration costs,” she said.

The NDB CEO further says although seeing operational loss of P86.4 million, her bank remains strong as asset base grew by 11.6 percent to P1.58 Billion from P1.4 Billion in the year ended March 2013.  Loans and advances also increased by 9.81 percent to P1.3 Billion from P1.2 Billion.

“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.” she said.  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.

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, rebranding 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 the audited results 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.

Editor's Comment
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