The Development Bank of Namibia (DBN) last week announced that loans and advances have grown to N$3.8 billion while the bank’s assets grew to N$4.59 billion.
DBN 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. Because of this change, the annual report for 2015/16 financial year covers a 15 month period, and standard 12 month reporting will be resumed in 2017..
During the period under review DBN loans and advances grew to N$3.8 billion at 31 March 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 while 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 at 4.1 per cent, below the maximum budget percentage of 5.0 per cent. This falls approximately 30 per cent below the recommended level of bad debt of 6 per cent advocated by the Association of African Development Finance Institutions (AADFI)
The Bank’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 per cent 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 focus 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.
DBN Chief Executive Officer Martin Inkumbi said the shift in the strategic focus 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.
Inkumbi 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.
DBN is establishing an in-house treasury function to support its capital raising efforts and liquidity management also a post investment and loan monitoring function was created as part of its credit risk management function to ensure appropriate utilization of the funds and to support ongoing risk management of enterprises and projects that the institution has invested in.
The Bank 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.