By Business Reporter
AGRICULTURAL lender, Agribank, has reported solid financial performance for the year ended 31 March 2017, despite a difficult operating environment, while saying that its loan book has grown by 7.4 percent year-on-year (y-o-y), while its interest income grew by 6.4 percent y-o-y.
While delivering the bank’s financials last week, Agribank Chief Executive Officer, Sakaria Nghikembua, highlighted that although general administrative expenses went up by 11 percent, this is a slowdown from the 17 percent growth recorded for the year ended March 2016.
Net profit increased from N$7.3 million in 2016 to N$138 million in 2017.
“If provisions in respect of post-retirement medical aid are excluded from the general expenses, then operating expenses only went up by 7 percent in the latest financial year. Another main contributor to the rise in general expenses is depreciation, as a result of new vehicles and furniture acquired for the branches.
“This is as a result of both operating performance and a change in the method of the provision on advances, from a general provision based on outstanding loan balances, to a specific method based on individual loan accounts. Individual account provisioning is in line with the Bank of Namibia’s guidelines for commercial banks, which Agribank adopted for the 2017 financial statements,” Nghikembua said.
In line with good corporate governance practices, the bank finalised its annual audit and held its annual general meeting within the prescribed six-month period after the financial year-end.
The annual general meeting, which took place in Windhoek on 21 September, was attended by representatives of the ministries of finance, land reform and public enterprises.
Other achievements recorded during the 2016/17 financial year included the finalisation and implementation of the bank’s five-year strategic plan, the implementation of a bank-wide performance management system, the launch of the no-collateral loan product for communal farmers, the implementation of an arrears collection strategy, the establishment of an in-house Agri Advisory Services division to sharpen the focus on training and mentoring services for farmers, and the launch of product-specific awareness campaigns.
“For the current financial year, the bank will implement a new loan book funding strategy, whilst continuing to embed a high-performance culture in the business. The bank is currently in the process of re-engineering critical business processes, in order to improve customer service. Identified data integrity issues will also be addressed,” Nghikembua said.
Owing to historical issues, the audit for the year was qualified, as the auditor could not attain sufficient comfort regarding the accuracy and completeness of collateral securities data. In 2009, the bank migrated from BankMaster to SAP as its core banking system. At that time, SAP did not have the functionality to capture collateral securities. This functionality was developed between 2010 and 2012. In the intervening period, collateral securities information was captured in excel format, with the uploading of the data from excel to SAP taking place in August 2012.
Since then, the capturing of the collateral securities data was done directly onto the SAP system.
“For the past five years, the bank has been running a project to complete the capturing of the collateral securities data onto SAP. However, this information was found by the external auditor to be inaccurate and also incomplete, resulting in the qualification. The bank has taken immediate steps to identify all capturing errors within the data and will ensure that corrective action is taken to avoid a similar situation in future,” Nghikembua added.
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