NDB loan burden hovers over P500million

27th September 2017
UPBEAT: NDB CEO Lorato Morapedi working round the clock to turnaround the development bank. Source:The Midweek Sun

The National Development Bank finds itself crippled by non-performing loans which are hovering at over half a million. In an engagement with the media last Friday, the Chief Executive Officer of the soon to commercialise development bank, Lorato Morapedi revealed that the business is going through a tough trading environment. Non- performing loans (NPLs) are on the shoot up.

“As at March 2017 our level of NPLs is at P672million which is 45 percent of our loan book. For 2015/16 we took a conscious decision to slow down disbursements to P122million from the normal average of P400million in the previous years. The lower the disbursements the lower the revenue,” revealed Morapedi. Just recently, Bank of Botswana Governor, Moses Pelaelo expressed concerns on the recent upward trend in non-performing loans.

Pelaelo said while this trend could be, in part, due to sluggish global economic activity and idiosyncratic business performance and environment, there is some evidence of lack of financial discipline on the part of some individuals and poor management practices by some businesses. The bank finances mostly agriculture projects which constitute 48 percent of its loan book, 16 percent amounts to the share of mortgage financing, 12 percent to commerce and retail and one (1) percent on human capital.

According to the bank’s management projects that have borrowed are unable to pay on time. For the 2015/16 reporting period, they managed to recover P116million from non- performing loans and are continuing to collect. The high NPLs resulted in high impairments leaving the bank to record a loss of P168million with the bulk coming from the impairments. “It is not a good state of affairs but what is important is that we know where this problem comes from. We are hoping to recover P100million this year.

We have revised our loan book policy and this will come up with an improved quality loan book and will see the bank’s profitability increasing,” said a hopeful Morapedi. The challenges the bank highlighted range from drought, Foot and Mouth Disease, government spending cuts, lay-offs from mining and lower interests rates amongst others.

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