The National Development Bank (NDB) recorded massive losses of P86.4 million in the financial year ended March 2014, compared to a profit of P45.6 million in the year.
The bank has attributed the decline largely to the significant rise in impairments’ charge from P38.5million to P163.7million. This comes on the backdrop of the bank’s adopted project to commercialise its operations.
“One of the major projects undertaken towards commercialisation readiness was the implementation, in 2013, of a new banking system (SAP) which necessitated a major data clean-up exercise, thereby delaying completion of the 2013/14 statutory financial audit till February 2015 when the fieldwork was completed,” reads the bank’s statement.
However, NDB said it will remain focused on its key mandate in the midst of the tough economic environment in which it is operating. Chief Executive Officer, Lorato Morapedi explained that the bank’s continued focus and support of start-up businesses as well as agricultural projects, which are periodically affected by drought and livestock diseases, has resulted in a sharp rise in impairments allowance by 86 percent.
Despite the recorded loss, the bank however remains strong as indicated by an increase in its asset base by 11.55 percent (P1.58 billion compared to P1.415 billion in March 2013). Loans and advances increased by 9.81 percent (P1.31 billion compared to P1.2 billion in March 2013) while interest income increased by 8 percent from P202 million to P218 million. Operating expenses also increase by only four percent, which is indicative of the bank’s efforts to manage costs in an environment of increasing administration costs.
“During the period under review the bank implemented some major projects which required significant cash outflows. These include procurement and installation of the new integrated banking system mentioned above, branch office refurbishment, rebranding exercise and the organisational structure realignment exercise,” Morapedi stated.