Pandemic bites as DBSA net profit cut by forex losses
JOHANNESBURG - THE DEVELOPMENT Bank of Southern Africa (DBSA) yesterday said its profits for the period ended in September had fallen by more than R200 million due to the Covid-19 pandemic.
The DBSA said its net profit for the period declined R211m to R594m from R805m a year ago, after the challenging environment was worsened by the outbreak of the pandemic.
The bank said the decline in net profit was primarily driven by a foreign exchange loss amounting to R354m.
DBSA chief executive Patrick Dlamini, however, said the bank had remained profitable despite a challenging environment which had been worsened by the outbreak of the Covid-19 pandemic.
Dlamini said the bank remained efficient in managing operational costs and the cost optimisation strategy continues to be effective. “The bank’s liquidity and capital positions remain strong,” he said.
“Notwithstanding the disruption of the local fixed income market, the DBSA has been successful in raising funding from international development finance institutions as well as international and local commercial banks and concluded bond market private placements.”
Moody’s has downgraded DBSA’s corporate family ratings with a negative outlook as rising fiscal pressures are increasingly compromising the government’s ability to provide timely and adequate support to the bank.
DBSA chairperson Enoch Godongwana said the bank’s operating context had been exacerbated by Covid-19. “As a key player in infrastructure development, we also note with concern the fault lines that the pandemic has revealed in our society due to the lack of essential services in underdeveloped communities in our country,” Godongwana said.
“We must work tirelessly to respond to the tangible needs of the country and aggressively pursue our developmental agenda,” he said.
The DBSA finalised a list of shovel-ready projects and had begun work to expand private investment into public infrastructure sectors with revenue streams during the period.
The projects include much-needed student accommodation, social housing, independent water production, rail freight branch lines, embedded electricity generation, municipal bulk infrastructure and broadband roll-out.
The bank’s total asset base increased by 3.2 percent from R100 billion from March to R104bn in September, primarily due to an increase in liquidity holdings.
The DBSA’s total disbursements of R15.4bn exceeded its target for the year, rising by 74 percent on the previous year’s disbursements of R8.7bn.
The DBSA was successful in raising funding from international development finance institutions as well as international and local commercial banks and concluded bond market private placements.
The bank’s total debt thus increased from R61bn in March to R64bn in September, which was used to fund the bank’s development activities and infrastructure financing activities and increase its liquidity holdings.