The government has come to the rescue of the beleaguered Land Bank.
The Budget Review said the Land Bank would be allocated R5bn in 2021/2022 and R1bn in each of the following two years.
The 2020 special adjustments budget included an allocation of R3bn for the bank in 2020/2021 while the medium-term budget policy statement tabled by finance minister Tito Mboweni in October noted that an additional R7bn would be required to support the restructuring of the entity.
The state-owned bank, SA’s biggest agricultural lender, reported an annual loss of more than R2bn for the year ended March 31 2020. The results showed non-performing loans almost doubled to R8.18bn, accounting for 18.1% of the Land Bank’s total gross loan book of R45.142bn.
The Treasury admitted that the bank was in financial distress. At the end of 2019/2020 it said total assets amounted to R46.2bn with liabilities of R43.7bn and a loss of R2.1bn.
“Sustained droughts, combined with a higher frequency of livestock and crop disease contributed to a cost-to-income ratio of 114% and non-performing loans of 18.1%.”
The Budget Review noted that the auditor-general had identified inadequate internal controls in the audit of the 2019/2020 financial statements, but said the bank had provided a remedial plan to address the adverse findings.
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