Bumber performance for DBN in 2008

FOR every one dollar the Development Bank of Namibia (DBN) pumped into projects last year, N$2,30 more was spent in the economy.
That was the impact of the bank’s net profit of N$49,9 million for the financial year ending December 31 2008, DBN Board Chairman Sven Thieme said yesterday.

‘This means that we can help realise large projects that the bank’s balance sheet can’t absorb at this stage,’ he said.The DBN attained the net profit by itself, not needing any additional injections like Government’s N$10 million grant in 2007.The good news continued: the DBN’s balance sheet grew by 30,9 per cent compared to 2007 and stood at N$852 million at year-end.The loan book exploded, increasing by 98 per cent to N$348 million. This amount represents approved projects, where financing was disbursed to kick-start them.In total, the DBN approved 81 loans in all 13 regions of Namibia last year. If all these get off the ground, 4 852 people will either keep their permanent job or get one. Also, 1 281 people will get part-time jobs.The N$100 million partnership between the DBN and commercial banks, FNB Namibia and Bank Windhoek, to boost the sector for small and medium enterprises (SMEs) resulted in 446 jobs created by more than 40 new businesses.DBN Chief Executive Officer (CEO) David Nuyoma beamed. Unable to voice his pleasure due to a bad cold, the CEO had to rely on his statement published in the annual report.The DBN is the youngest in the Southern African Development Community’s (SADC) network for development finance institutions (DFIs). In 2008, it was one of only three DFIs in the region selected for rating by an international rating agency. Fitch Rating did an assessment to determine whether the DBN is ready for a full credit rating.’This selection is symbolic of a new reality and reversal of the trend of underperforming development banks,’ Nuyoma said.The quality and regularity of financial reporting, as well as the quality of the DBN’s loan book, enabled the bank to become the face of the new DFI, he said.Summarising the results as ‘healthy’, Nuyoma said it is important to realise that they were achieved at a time when financial institutions all over the world saw a shocking shrinkage in value.Unfortunately, 2008 will also be remembered as the year when the DBN first reported impairments on its loan book.’This is mainly as a result of the fair valuing of fully secured loans to Bank Windhoek and FNB Namibia for on-lending to SMEs at discounted interest rates,’ Thieme said.Nuyoma is equally unfazed by the N$25,3 million put aside for impairment on advances in the financial statements.’These first impairments are a natural progression for the DBN as development banks undertake financing activities with a higher risk profile than commercial banks. It has been anticipated in the business plan at establishment that non-performing loans would have to be expected,’ he said.In the same breath, Nuyoma added that the DBN will keep a tight lid on its loan book. ‘Sound assessment of application remains a prime consideration,’ he said.Chief Financial Officer Renier Van Rooyen stressed that the impairment amount doesn’t mean that the entire N$25,3 million will be written off.The DBN willingly adheres to the Bank of Namibia’s (BoN) rules that a bad loan is defined as any loan that is three months and more in arrears. Only N$197 323 was actually written off last year, and these were mainly bad loans the DBN inherited from the beleaguered National Development Fund (NDF).Total impairment includes a provision of N$9,4 million for non-performing loans, about N$12,7 million for the discounting of off-market loans to Bank Windhoek and FNB Namibia and nearly N$3,3 million for discounting of off-market DFN loans.jo-mare@namibian.com.na