The National Development Bank (NDB) says its long awaited privatisation process was delayed to allow for the bank to undergo commercialisation so as to ensure that a worthy asset is ultimately privatized.
NDB Chief Executive Officer (CEO), Lerato Morapedi said during a media briefing last week that the process of commercialisation is currently ongoing, after the bank identified a new and viable business model. NDB also applied for a banking licence after the Ministry of Finance approved the business model.
“We have done the bank’s realignment exercise to align its structure to corporate strategy,” said Morapedi.
Among other developments in the 2013/14 financial year, NDB went through an office refurbishment exercise and implemented strategies to improve customer service. The bank also refurbished its banking halls to make them compliant with Bank of Botswana (BoB) standards. Morapedi also revealed that NDB acquired an integrated banking system to improve customer service.
Asked about challenges that the bank is facing, Morapedi expressed concern about continuous drought, diseases, proliferation of over borrowed customers and slow recovery of the economy.
“We are feeling the negative impact of current liquidity challenges and we have focused our attention on non-performing loans to boost collections. NDB is a bank that operates in risky sectors,” she said.
The NDB Act limits the bank’s scope of operations as it does not take deposits while its operations are restricted by a very narrow product range. NDB’s migration of data to the new banking system also unearthed a number of exceptions. The bank recorded a comprehensive loss of P86.4 million in 2013/14 due to P163 million provisions (P38million in 2012/13). However, Morapedi stated that the loss is expected to reduce in the 2014/15 financial year.
“NDB expects to return to profitability in the 2015/16 financial year. We are already realising benefits of the new system, which include improved information validation and data integrity checks. The bank has enhanced monitoring of new loans and we now enjoy a 360 degrees view of customer information,” said Morapedi.
The bank also adopted a three year turnaround plan in 2015 and it aims to reduce non-performing loans by 80 percent.
“We also aim for zero contamination on new disbursements and will focus on high yielding products going forward,” said Morapedi.
The bank is still in a system settling phase and is attending to both system and data issues that came up as a result of improved controls on the core banking system environment. However, Morapedi remained bullish on the bank’s privatization and commercialization processes and its new business model, which she believes are potential enablers for more efficient banking through product development and improvement. Morapedi further said NDB has the ability to widen banking services to the unbanked and rural communities, a move that is expected to improve profitability and sustainability. She further said the bank’s management fully understands that the shareholder wants NDB to be a sustainable and profitable entity.
“A lot of policy frameworks and partnerships have been embarked on to achieve this ideal bank and major transformation of people and processes,” said Morapedi.
Meanwhile, NDB has appointed audit Firm Ernst&Young to assist with the commercialization process.