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Agribank loan book grew from N$2,4b to N$2,8b in one year

Sakaria Nghikembua

Agribank says its loan book grew by 15 per cent year on year from N$2.4 billion in 2018 to N$2.8 billion in 2019.

Speaking after the bank’s annual general meeting in Windhoek Wednesday, chief executive officer Sakaria Nghikembua said that this growth comes despite the difficult operating environment, characterised by a severe drought and an economy in recession, the bank delivered a healthy set of results.

According to Nghikembua, the growth in the loan book came largely on the back of new business growth.

Disbursements were 22 per cent up on the prior year, increasing from N$358 million in 2018 to N$438 million in 2019.

As a result, interest income grew 14.5 per cent from N$189 million in 2018 to N$216 million in 2019. Provisions for bad debts on loan advances were well contained partly because of a steady hold on the collections rate and largely because of ensuring sufficient collateral cover for high-risk loan accounts. Expenses were well contained at a growth of 4.4 per cent whilst the bank’s surplus increased 87 per cent from N$30 million in 2018 to N$56 million in 2019.

The Bank’s total assets grew by nearly 7 per cent year on year, exceeding the N$3 billion-dollar mark for the first time in history.

Total assets stood at N$3.011 billion at the end of March 2019 compared to N$2.82 billion the year before.

Turning to key strategic actions during the year, Nghikembua stated that the bank opened a branch office in Gobabis in Omaheke region as part of its strategy to be accessible to its customers.

The bank continued to roll out its salary-backed no-collateral product for communal farmers, disbursing N$26 million in new loans for this product during the year. Since launch in April 2017, the bank has disbursed

a total of N$61 million in salary-backed no-collateral loans to communal farmers. In addition, the bank also introduced a no-collateral loan product for full-time communal farmers called emerging retail financing product (ERFP) in May 2018.

A total of N$4.5 million was disbursed to communal farmers under this product during the financial year. The introduction of the two no-collateral loan products makes it possible for communal farmers to access funding for agricultural purposes with clients using the loans for livestock acquisition, water and electricity infrastructure, tractors and implements and fencing amongst other needs.

Through its lending activities, the bank created and/or maintained 46,816 direct jobs in the agriculture in 2019, compared to 45,232 jobs in 2018. By creating about a third of all jobs in the agricultural sector, the bank plays a very important role in income generation and poverty alleviation.

As part of its corporate social investments drive, the bank took 6 453 farmers and farming employees through its training and mentorship interventions in 2019, registering a 27 per cent increase on the 5091 beneficiaries in 2018.

At the same time, the bank continued its sponsorship of three students doing veterinary medicine, as well as crop and animal sciences at the University of Namibia whilst also investing in its employees through leadership development and skills-specific programmes.

Medium-term trends demonstrate that the bank is firmly on a positive trajectory. The rate of growth in interest income has changed from low levels at 1 per cent in 2015 and 2016 to 6.4 per cent in 2017, 12.8 per cent in 2018 and 14.5 per cent in 2019.

The rate of growth in expenses, on the other hand, has decreased from high levels of 10 per cent and 17 per in 2015 and 2016 respectively to 11 per cent in 2017, 7.8 per cent in 2018 and 4.4 per cent in 2019. During the same period, the bank registered a consistently increasing surplus position, in line with its sustainability strategy. Collections have steadily grown from N$157 million in 2015 to N$296 million in 2019.

Despite the current depressed economic and harsh climatic environments, reasonable progress continues to be made on the collections front as more customers positively respond to the bank’s call to service their loan accounts.

The bank’s prudential rating score has improved from 65 per cent in 2016 to 81 per cent in 2019, indicating demonstrable progress in governance, financial management and operational standards.

The ratings are externally audited.

Nghikembua indicated that despite environmental and internal legacy challenges, the bank is making good and rapid progress, stating ‘shareholder support and good leadership at board level have been critical in ensuring we have the right strategy and the right people to make a difference.

“Our clients, too, have become increasingly supportive of our efforts. As the statistics show, the improvements over the past three years have been all-round. We know it has been a challenging road and that it will remain so for a long time yet, but we are relishing the opportunity to serve and make a lasting impact by running a sustainable organisation.”

Wonder Guchu

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