National Development Bank (NDB) has developed and launched a turnaround strategy to improve its operational and financial performance. BG Business has learnt. NDB’s Head of Branding, Marketing and Communications, Harry Marks told BG Business that, “The strategy runs for three years and its implementation started beginning of April 2015.
Whilst there are other focus areas, the major tenant of the turnaround strategy is collection. The primary goal is to reduce total non-performing loans by 80 percent by end of the first year of the strategy.” This he said will be achieved through increased number of integrated collection activities to intensify and complement internal collections efforts. Marks said the bank will during the turnaround plan focus on growing its net interest income by 20.4million per annum by improving non-fee income. “The plan should also be seen as an impetus towards the commercialisation exercise which the bank is due to embark on,” he noted. The bank said in a statement Friday, it is expecting to release its delayed financial statements for the year ended 31 March 2014 any time from now after they have gone through the relevant governance approval structures.
According to the statement, compared to the previous year (2012-13), the bank has recorded a lower financial performance than expected. The Bank’s interest income increased by 8 percent from P202million in 2013 to P218 million. Operating expenses increased by only 4 percent which is indicative of the bank’s efforts to manage costs in an environment of increasing administration costs. Chief Executive Officer, Lorato Morapedi indicated that the bank continues to support start-up businesses as well as agricultural projects, which are periodically affected by drought and livestock diseases.
This significantly contributed to a sharp rise in impairments allowance, which mainly led to the bank recording an operational loss amounting P86.4 million. “In the midst of the tough economic environment in which the bank is operating, characterised by a squeezed interest rate environment, the bank continues to focus on the execution of its core development and citizen empowerment mandate,” she said. She mentioned that during the 2013-14 financial year the bank implemented some major projects, which required significant cash outflows. These included procurement and installation of the new integrated banking system, branch office refurbishment, rebranding exercise and the organisational structure realignment exercise, which were all necessary as the bank now embarked on a major transformation exercise which will see the national asset transformed into a fully-fledged commercialised and privatised entity.
Morapedi explained that the completion of this audit was delayed mainly due to the migration to the new integrated banking system which required a detailed audit between the old system and the new system impacting on time lines for production of the March 2014 financial results. She reported that requests for extensions were approved at different governance structures and that all key stakeholders were accordingly updated throughout this process.