The Development Bank of Southern Africa (DBSA) ramped up total infrastructure support by 21% to R72.9 billion for the year ended March 31, 2024 as it celebrated its 40th anniversary.
The Development Bank of Southern Africa (DBSA) ramped up total infrastructure support by 21% to R72.9 billion for the year ended March 31, 2024 as it celebrated its 40th anniversary.
In the review period the development finance institution (DFI), which is owned by South Africa, faced slow economic growth, global inflationary pressures and geopolitical tensions.
Boitumelo Mosako, the CEO of the DBSA, speaking at the results presentation yesterday, said during the past 40 years since the DBSA was founded in 1983 “it has demonstrated exceptional results over time. The DBSA was only initially only in South Africa, grew to southern Africa and in the past 13 years its mandate was extended to sub-Saharan Africa.“
Some highlights that the DBSA emphasised were a R2.5 billion infrastructure unlocked for under resourced municipalities; 1 308 local SMMEs and subcontractors employed in the construction projects; R4.1bn worth of infrastructure delivered by black-owned entities of which R2.3bn was delivered by black women owned entities and 31 638 temporary and permanent jobs facilitated.
Ntombizodwa Mbele, the chief financial officer, said despite a difficult environment, the DBSA’s 2024 financial year featured a record financial performance.
The Bank’s net profit decreased by 11.5% to R4.6bn primarily due to lower foreign currency gains. However, the Bank’s sustainable earnings which exclude currency exchange gains or losses increased by 7% to R4.5bn due to double-digit growth in net interest income.
Mbele said, “Sustainable earnings of R4.5 billion significantly exceeded expectations, buoyed by a strong net interest income of R7.7 billion as a result of high interest rates and higher than anticipated loan disbursements for the year.
Net profit further benefited from the net foreign exchange gains owing to the depreciation of the Rand against major foreign currencies. In addition, operating expenses of R1.5 billion were lower than expected.“
She said despite the challenging environment, the DBSA had successfully raised capital and attracted new investors to its portfolio. Notably, a syndicate of banks from the Middle Eastern region has invested $255 million (R4.6bn) in its operations.
Net interest income increased by 18%, resulting from resilient loan book performance, growth in the loan book, solid capital structure, high interest rates and cost optimisation within the Treasury funding activities. The cost-to-income ratio improved to 21% from 23% in the prior year.
DBSA reported that total assets increased by 9% to R118.3bn, driven by higher disbursements and funding activities.
The Bank achieved development loans growth of R5.7bn mainly driven by disbursements of R17bn, foreign exchange translation gains of R1.7 bn on foreign currency-denominated loans and partly offset by capital repayments of R12.8bn. The DBSA said it exceeded its disbursement target by R3 billion.
The Bank’s liquidity and capital position remained robust, with the Bank’s total equity base increasing by 9.2% to R52bn. Total cash holdings at year end amounted to R10.8bn.
DBSA said its current loan book reflected South Africa’s energy sector, which is carbon intensive. Roughly 80% of the DBSA’s loan book was in municipal finance and energy.
Its total loan book repayments, which is collections from clients, rose by 28% to a new record of R23bn.
Its expected credit loss charge for the year increased to R1.4bn from R1.1bn the prior year.
The DBSA said in South Africa, subdued economic growth was expected to persist given the energy security and reliability challenges, logistical constraints and inflation
The bank highlighted that the long-standing slow implementation of structural reforms to respond to high unemployment, crime and inequality, power shortages and logistical challenges, which were creating productivity and trade bottlenecks remained a concern.
Looking ahead, Ebrahim Rasool, the chairperson of DBSA, said, “We operate in a difficult environment, with a weak global economy grappling with high inflation and interest rates...
“Factors such as ineffective public administration in South Africa, alongside anticipated changes in state-owned entity governance and digitalisation trends, add to the Bank’s concerns regarding business growth, efficiency and rapid transition, some of which are rooted in historical trends. Within the myriad of challenges, there are significant opportunities, which the Bank is well positioned to exploit,“ he said.
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