By Lehlohonolo Lehana.
The Development Bank of Southern Africa (DBSA), a Development Finance Institution (DFI) announced its highest record profits to date, of approximately R5.2bn for the 2022-2023 financial year.
The DBSA revealed that, of the R5.2-billion net profit, sustainable earnings amounted to R4.2-billion, while net foreign exchange gains amounted to R860-million, owing to the significant depreciation of the rand. A critical contributor to this financial performance is a solid net interest generated from the bank’s loan book.
Further, DFI continues to optimally manage its costs as evidenced by a cost-income ratio that remains low and unchanged at 24% when compared to the prior year.
The DBSA reported that its loan book, on average, remains largely moderate risk when compared to last year, and non-performing ratios improved when compared to prior year.
During the year under review, the gross development loans and development bonds reached a record of R108-billion on the back of increased disbursements, currency exchange movements and the prevailing high interest rate environment.
The single largest risk that the DBSA faces from its lending activities is credit risk. The bank has remained conservative in provisioning and proactive in loan management and monitoring given the evolving current economic environment and negative outlook skewed to the downside.
The bank successfully raised funding from a diverse pool of local and international commercial banks, international development finance institutions and the domestic fixed income market amounting to R11-billion.
The bank’s loan book remained resilient in a challenging economic environment, with high cash collections of about R17-billion, comprising interest of R8.5-billion and capital of R8.5-billion. It continues to have high liquidity levels which allows the bank to successfully meet maturing financial obligations and disbursement targets.
The DFI’s capital base expanded substantially by R5.2-billion when compared with last year’s R3.8-billion increase in the equity base. The bank’s capital ratio increased to 44% from about 43% last year. Overall, the bank remains well capitalised.
The DBSA also noted that its total asset base rose to a record R109-billion as of March 31. The previous financial year closed with R100-billion. The increase is owed to new disbursements and currency movements.
Striking a fine balance between meaningful development and financial sustainability, we have weathered what continues to be a tough operating environment both locally and internationally, with an increasingly complex global geopolitical landscape.
“Key to these encouraging financial results is our commitment to governance, particularly accountability, as a driving value that we hold dear across all our divisions. This means that beyond our balance sheet, we have ensured that all our projects have well-defined and astutely measured sustainable development impact, delivering tangible benefits to our stakeholders,” said DBSA CEO Boitumelo Mosako.
Read the full annual report here: DBSA Annual Reports 2023.