THE Land Bank, would work hard to ensure that it recovered the agricultural financing market share it lost when the institution was beleaguered by fraud, corruption and lax corporate governance, Phakamani Hadebe, the chief executive of the state agricultural lender, said yesterday.

The bank planned to interact with customers including commercial and black farmers in a bid to restore its credibility, lost when the bank was riven with controversies.

Hadebe announced the plan during the release of the bank's annual results, which showed that the institution had managed to reduce its wasteful expenditure to R930 000 from R16.2 million last year.

"Shortly before we took over, the book was shrinking by 25 percent annually. But in the first quarter of the year, it grew by R1 billion," Hadebe said.

The reins of the troubled lender, which made headlines for shady corporate governance and fraud, were transferred to the National Treasury in 2008 from the former department of agriculture and land affairs, as it faced collapse.

John Purchase, the chief executive of the Agricultural Business Chamber, said the sectoral body representing agribusinesses was pleased to see "a considerable improvement in the bank's financial position and the fact that it received an unqualified audit".

"However, the challenge is to see the bank playing a more developmental role in ensuring that agriculture is becoming much more profitable. We do, however, understand that the commodities markets are currently depressed," he said.

Profit at the bank grew to R354m from R145m and net income from banking operations took a marginal knock to R193m from R220m. Non-performing loans as a percentage of total credit improved to 13 percent from 23 percent a year earlier, while the bank's capital adequacy levels rose to 42 percent from 23 percent.

Finance Minister Pravin Gordhan said the bank had done a good job and it was incumbent on it to build packages to take the agricultural sector to new heights.

"The worst is behind the bank now, they have to start to build private-public partnerships and develop products to ensure agriculture's viability," the minister said.

Gordhan said in the past financial year the National Treasury had approved R3.5bn of guarantees in support of the Land Bank's turnaround.

"Of this amount, R1bn has already been converted into a cash injection into the bank's capital. This support has strengthened the bank's balance sheet and will ensure that it lives up to its mandate to promote economic development in the rural areas," he said.

Hadebe said now that the bank had been able to establish some stability, it would work collectively with the government to ensure a value chain financing model.

"In this model, the Departments of Finance and Agriculture and Rural Development would put guarantees with the bank to allow both promising black and commercial farmers access to finance, expertise and markets," Hadebe said.

The new model would ensure that the bank approached clients to guide farmers on the harvests they would require.

"It is pointless to have huge harvests of sorghum when the clients need more wheat supplies. The same will apply with various forms of meat," Hadebe noted.