The Development Bank of Southern Africa (DBSA), a development finance institution wholly owned by the South African government, reported a record R3.8 billion net profit in the financial year ended March 31, 2022.
In its financial results for the year ended March 31, 2022, released on Friday, the bank said profitability increased by more than 168 percent from R1.4 billion to R3.8 billion in the previous financial year.
The bank said it successfully delivered infrastructure to the total value of R33.4bn, of which R15.1bn was infrastructure catalysed.
According to the bank, 13 projects were successfully completed at the local government level, while infrastructure unlocked within under-resourced municipalities amounted to R2.1bn.
Projects approved for Broad-Based Black Economic Empowerment (B-BBEE) entities for project preparation funding amounted to R2.1 billion, it said.
"R2.9bn of the bank’s infrastructure spend benefited B-BBEE companies, 40 percent of which have women ownership with greater than 30 percent shareholding," DBSA said.
The bank said 1,543 small, micro, and medium enterprises benefited from the infrastructure that has been delivered to date; 152 of these businesses are women-owned, 931 learners received access to a newly built school; 56,958 learners are benefiting from 104 newly refurbished schools.
DBSA said it continued to have strong capital buffers for unexpected loss events. The total equity base of the bank increased by R3.8bn from R39.1bn as of March 31, 2021, to R42.9 billion as of 31 March 2022.
"The debt-to-equity ratio improved to 88 percent, from a prior year ratio of 101 percent. Overall, the bank remains well capitalized, and the ratio remains well below its regulatory debt-to-equity ratio cap of 250 percent per the DBSA Act. This provides the DBSA with an opportunity to gear the capital further in financing infrastructure investments," the bank said.
DBSA chief executive Patrick Dlamini said: “Our stellar financial results are truly meaningful when looked through the lens of lives impacted by the bank. Driven by a concerted effort to bend the arc of history towards shared prosperity, we are pleased that the end of the 2021/22 financial year came with improved livelihoods for many of our citizens".
According to the DBSA, the profit increase was influenced by solid growth in net interest income from the bank’s core lending activities, amounting to 18 percent when compared to the prior year.
"Other factors that influenced the positive results include stabilisation of expected credit losses which reduced impairment charges, increase in cash collections and repayments from the development loans, and effective cost containment strategies," it said.
Dlamini said the bank was pleased with such a positive result coming out of the 2021/22 financial year.
"It is a testament to the resilience of the bank, its governance structures, and the duty of care with which all our teams continue to approach our mandate. The economic fallout from the pandemic spurred the implementation of innovative monetary and fiscal policy measures across the world, and we were not spared.
"While economies deal with the lingering disruption to economic activities such as supply chain issues, it has been prudent to continue to project conservatively as overall recovery might be delayed. That being said, our infrastructure-led recovery has been an important driver of post-lockdown recovery," he said.
Dlamini said the DBSA, “has remained focused on its mandate and pursued our growth strategy, emphasising our catalytic role towards sustainable infrastructure development beyond the confines of its balance sheet.”
The bank continues to show consistent strong liquidity and capital positions, DBSA said.
"Liquidity holdings continue to be high relative to the pre-COVID-19 period. Contributing to this is the bank’s success in raising funding from international and local commercial banks, as well as the local fixed income market. The bank’s total debt funding decreased by approximately R3bn, from R59bn as of March 31, 2021, to R56bn as of March 31, 2022, due to repayment of debt funding," the bank said.
Development loan disbursement activities amounted to approximately R12.9bn, compared to R13.5bn as of March 31, 2021. Cash collections and client loan repayments on the development loans amounted to about R19bn, of which R12bn was principal or loan capital repayments, while R7bn was interest received from clients.
"The DBSA’s strong leadership and management team has steered the Bank through a challenging economic climate while following principles of good corporate governance.
"We have a resilient balance sheet, and we continue to meet our infrastructure development mandate through lending and non-lending activities across all spheres of government and beyond. Key in our growth strategy is ensuring that we increase developmental impact using our own balance sheet, and through partnering with other local and international players," Dlamini said.
Looking ahead, Dlamini said: "We have a healthy pipeline of projects that provide for a solid springboard for success in the future, and we will continue to employ due care as custodians of South Africa’s infrastructure development".
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