Johannesburg - The Development Bank of Southern Africa (DBSA) suffered a net loss of R826 million in the year to March and operating income was stagnant, bogged down by the vulnerability of its private sector investments and strenuous economic conditions.
The state-owned lender, which funds public and private sector infrastructure projects, said yesterday that the loss was caused by impairments on development loans of R1.6 billion and revaluation losses on financial instruments of R403m.
Operating income was R1.94 billion in the period, slightly down from R1.95bn the previous year.
The losses were mainly concentrated in the private sector. The bank said it planned to reduce its exposure to investments in that sector, which was susceptible to market changes.
“Going forward, the DBSA’s focus will predominately be directed towards the financing of public sector infrastructure projects in the water, sanitation, energy, transportation and information and communications technology sectors, which are less susceptible to changes in economic conditions,” the DBSA said.
Chief executive Patrick Dlamini said: “We are releasing annual results against the backdrop of a challenging operating environment, especially in the metro and state-owned enterprises markets, as well as the impact of the downturn on the economy.”
The bank reported 2.7 percent growth in total assets to R53.9bn during the year to March.
Growth in operating expenses of 2.3 percent, excluding restructuring expenses, was below inflation.
The bank has invested a total of R43.1bn over the past five years in both public and private projects.
DBSA said that in the year to March it spent R9.2bn on infrastructure, of which 81 percent was spent in South Africa and the balance in other Southern African Development Community (SADC) countries.
At least 22 100 direct job opportunities were expected to be created in South Africa from the infrastructure funding investments.
“Low levels of economic integration among the countries in the region continue to impact many countries on the continent,” said the DBSA.
The bank injected money into energy and transport projects in SADC, in countries such as Angola, Mozambique and Zambia.
Investments totalled R5.6bn in the year to March, up from R3.8bn in the prior year.
Disbursements to municipalities increased 36.5 percent to R1.2bn. The bank approved investments of R2.3bn to support metros, and approvals to secondary and under-resourced municipalities totalled R937m.
The bank ploughed R5.6bn into energy generation projects, including support for the government’s plan to procure a substantial amount of electricity from independent producers.
“We are confident that the implementation of the bank’s growth strategy will enable us to improve the scale of development impact and contribute in bridging the infrastructure gap to enhance the prosperity and well-being of people in South Africa and on the continent,” Dlamini said.
“Despite the current losses, the board and management recognises that there are enormous challenges and opportunities within the current infrastructure development environment and will continue to build the organisation to maximise its development impact on a sustainable basis through the long-term investment cycle,” he said.
Earlier this week, the DBSA announced that it had been accepted as a signatory to the UN Global Compact, a human and labour rights advocacy network. - Business Report