Development Bank of Southern Africa remains strongly capitalised
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THE DEVELOPMENT Bank of Southern Africa (DBSA), which helped deliver infrastructure of R26.6 billion in the year to March 31 with R8.2bn of catalysing funding, has remained strongly capitalised and able to deliver on its developmental mandate.
The bank said in its annual report Friday its liquidity and capital positions were strong even though Moody’s had downgraded its credit rating to a notch below the government, and the bank’s long-term national scale issuer rating to Aa3.za, from Aa1.za.
“Notwithstanding the disruption of the local fixed income market, DBSA has been successful in raising funding from international development finance institutions as well as international and local commercial banks.”
The bank said from its point of view, the major impact of the Covid-19 pandemic was disruption of the bond market and a big increase in credit risk associated with the development loan book, in particular exposures to some resource exporting countries.
Nevertheless, repayments from the loan book reached a record R19bn, R11bn in principle loan repayments and R8bn interest payments. Loan disbursement activities amounted to R13.5bn, a decline of some 14 percent over the previous year. The bank’s total debt funding decreased to R59bn as at March 31, 2021, from R61bn as at March 31, 2020.
The position of cash and its equivalents increased from R3.5bn at March 31, 2020, to about R9bn at March 31, 2021, representing an increase of 160 percent in cash and cash equivalents year-on-year.
The debt-to-equity ratio, including the R20bn callable capital, improved to 101 percent from 108 percent, well below the bank’s regulatory debt-to-equity ratio cap of 250 percent.
This balance sheet provision for expected credit losses (impairment provision) increased 12 percent to R11.4bn, but compared to the prior year, the credit loss provision (impairments) charge in the income statement significantly fell 68 percent to R1.2bn.
The gross non-performing loan ratio fell to 7.7 percent from 8 percent as at September 30, 2020, but increased from 7.2 percent as at March 2020.
The bank’s total asset base remained at the R100bn level, despite loan repayments of R19bn, offset by R5bn in currency movements and new disbursements R13.5bn.
The bank achieved R925 million in projects prepared and committed and was able to unlock infrastructure within under-resourced municipalities amounting to R1.4bn.
Projects approved for Broad-based Black Economic Empowerment entities for project preparation funding amounted to R2.1bn. Some 6 909 learners benefited from 11 newly built schools and 33 125 learners benefited from 51 refurbished schools. Interventions at municipal level resulted in the successful completion of 13 projects.
The bank is also, for instance, heavily involved in the move towards a more sustainable energy mix in South Africa and has to date, provided funding of some R18bn across Round 1 to Round 4 of the Renewable Energy Independent Power Producer Procurement Programme, as well as R13bn to BEE parties and local community entities involved in these projects.