The Development Bank of SA disbursed R17.5bn of new money to development projects in the year to end-March — up 2.9%, catalysing more than R91bn of infrastructure finance as it improved profitability, despite a difficult economic environment.
The bank increased net profit by 14.4% to a record R5.3bn for the year, with net interest income up 8.6%, operating income up 12.3%, and improvements in the quality of its loan book and its cash collections.
“The increase in the net profit for the current year stems from a solid increase in net interest income, positive fair value adjustments, offset by a currency loss reported following rand appreciation against the dollar,” the bank said.
About 70% of the bank’s book is in SA, with the rest across Sub-Saharan Africa and often denominated in hard currency, so currency volatility tends to have some effect on the results.
Total assets increased R2.3bn to R121bn. “The balance sheet has grown slightly but not at the level or ambition we are working towards in terms of our strategy,” CEO Boitumelo Mosako said. But the bank has room for growth, with a strong liquidity and capital position, it said.
Mosako said the bank, which has not required a capital injection from the government for more than a decade, uses its equity to catalyse development finance from other lenders.
Its focus is on infrastructure development, in digital, transport, energy and water infrastructure as well as in the social sector, where its focus is on healthcare, education and affordable housing. It has also been deploying risk capital to create new industries and support commercialisation of new technologies.
The bank has also worked with the Treasury on more than R37bn worth of approvals for infrastructure finance through the government’s Budget Facility for Infrastructure, with a pipeline totalling R100bn.
Municipalities are a big focus for the bank, accounting for about 31% of its lending book, but nonperforming loans in that sector are just 0.04% and cash collections in the latest year were in line with the municipalities’ contractual obligations.
CFO Zodwa Mbele said the bank was often asked why municipalities paid the DBSA when they didn’t pay Eskom, but she attributed this to the fact that the bank had a long-term appetite to restructure municipal debt and provide non-lending support.
The energy sector accounted for the largest share of the R17.5bn of disbursements during the year, followed by roads and drainage, education, oil and gas and transport, Mbele said.
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