Johannesburg - Development finance
institutions (DFIs) such as the Land Bank were more important than
ever, given the worldwide economic uncertainty, Finance Minister
Pravin Gordhan said in the bank's annual report released on Thursday.
The Land Bank's financial year ended in
DFIs became involved when markets
failed to deliver the country's economic objectives such as job
"This is particularly crucial in
agriculture, where South Africa continues to grapple with historical
imbalances and to search for innovative and considered ways of
transforming the sector," Gordhan said.
The Land Bank was expected to play a
larger role in development and to make a meaningful impact on the
In particular, it should increase its
market share, he said.
Already, 13 335 new job opportunities
had been created by the end of the financial year.
"The decision to recapitalise the
bank has proved successful, as it has already started paying
dividends," he said.
"This has allowed the bank to
focus on fulfilling its mandate."
Government was pleased that the bank
had exceeded all development targets for the 2012 financial year.
A new banking division, Retail Emerging
Markets, focused on helping small-scale farmers to attain commercial
Development farmers benefited from the
more affordable rates offered by the bank's Wholesale Finance
Chairman Ben Ngubane said the Land Bank
had performed well against commitments set in the previous year.
"The board agreed on certain
business growth targets, which have been achieved," he said.
It had ensured its systems were
workable and had entrenched a viable, sustainable business model.
The Land Bank received R750m from
government during the 2012 financial year as part of its
A further R200m was paid on 30 April.
"It is anticipated that the Land
Bank will continue to receive further recapitalisation and guarantees
in the medium term in light of its strategic role in development and
food security," the bank said.
Government support, as well as the
bank's own turnaround initiatives, saw core earnings improve.
Profit for 2012 dropped to R161.4m,
compared to the prior year's restated profit of R265m - a 39.1%
However, if an impairment write-back of
R137.5m was excluded, group profit increased by R33.9m, an increase
This was attributable to growth in the
loan book and a well-managed borrowing plan.
Total gross loans increased by 46.8% to
The bank's performing loan book grew by
54.5% over the past year, from R13.6bn to R21bn.
Non-performing loans had decreased from
R3.2bn in 2009 to R1.4bn in 2012.
Controls had been improved, including
It had begun implementing a risk
management plan with an annual disclosure checklist.
"The bank now enjoys proper
control systems and appropriate credit and risk policies and
processes," said Ngubane.
"Investor appetite for Land Bank
bonds continues to grow and liquidity is no longer a challenge."
Last year, Gordhan announced the Land
Bank would spend up to R1bn over two years on emerging farmers.
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