Floods hamper debt repayments

BUSINESSPEOPLE experiencing project delays in the North and Northeast because of the floods are struggling to repay their debt to the Development Bank of Namibia (DBN), whose non-performing loans have shot up by 19 per cent since the beginning of the year.

More than N$11,7 million of the DBN’s N$16,9 million worth of non-performing loans at the end of April can be directly linked to the devastating floods, Joy Sasman, Corporate Communications Manager of the bank, confirmed yesterday.Most affected are entrepreneurs involved in the completion of roads and schools, she said.However, the DBN is hopeful that these loans won’t turn bad and need to be written off.’We expect these clients to be back on track with their projects and payments in about three months,’ Sasman said.’The picture may look very different in May as clients continue to make payments and clear their outstanding amounts, and as new loans go on the list.’The DBN voluntarily follows the rules of the Bank of Namibia (BoN), regarding any loan that is in arrears for three months and more as a non-performing loan.Although non-performing loans at the end of April increased, the ratio of non-performing loans to the total DBN loan book has dropped from 4,1 per cent in December last year to 3,2 per cent.This is due to the loan book’s rapid growth from N$348 million in December to N$500 million in the first quarter of this year, Sasman said.For the first time since its establishment five years ago, the DBN has also made provision for impairments in their latest financial results.DBN Chairman Sven Thieme said the N$25,3 million provision in the 2008 books is mainly as a result of fair valuing fully secured loans to Bank Windhoek and FNB Namibia for on-lending to small and medium enterprises at discounted rates. This is not to say that the entire amount will end up as bad loans, Chief Financial Officer Renier Van Rooyen said.In fact, the DBN only wrote off N$197 323 last year and this was related to bad debt it inherited from the Development Fund of Namibia (DFN), Van Rooyen said.DBN Chief Executive Officer David Nuyoma described the provision as ‘natural’ and ‘anticipated’ as the bank takes on bigger risks than commercial banks.* Also read today’s Bottomline.jo-mare@namibian.com.na