Agribank loan book reaches N$2.8b

By Hilary Mare

PREMIER agricultural lender, Agribank’s loan book has grown by 15 percent year on year, from N$2.4 billion in 2018 to N$2.8 billion in 2019, Chief Executive Officer, Sakaria Nghikembua said last week while announcing the Bank’s financial results for the year to 31 March 2019.

Nghikembua explained that the growth in the loan book came largely on the back of new business growth.

“Disbursements were 22 percent up on prior year, increasing from N$358 million in 2018 to N$438 million in 2019. As a result, interest income grew 14.5 percent from N$189 million in 2018 to N$216 million in 2019. Provisions for bad debts on loan advances were well contained partly because of a steady hold on the collections rate and largely because of ensuring sufficient collateral cover for high-risk loan accounts. Expenses were well contained at a growth of 4.4 per cent whilst the bank’s surplus increased 87 per cent from N$30 million in 2018 to N$56 million in 2019,” explained Nghikembua.

The Bank’s total assets grew by nearly 7 percent year on year, exceeding the N$3 billion-dollar mark for the first time in history. Total assets stood at N$3.011 billion at the end of March 2019 compared to N$2.82 billion the year before.

Turning to key strategic actions during the year, Nghikembua stated that the bank opened a branch office in Gobabis in Omaheke region as part of its strategy to be accessible to its customers.

The bank continued to roll out its salary-backed no-collateral product for communal farmers, disbursing N$26 million in new loans for this product during the year.

“Since launch in April 2017, the bank has disbursed a total of N$61 million in salary-backed no-collateral loans to communal farmers. In addition, the bank also introduced a no-collateral loan product for full time communal farmers called emerging retail financing product (ERFP) in May 2018. A total of N$4.5 million was disbursed to communal farmers under this product during the financial year. The introduction of the two no-collateral loan products makes it possible for communal farmers to access funding for agricultural purposes with clients using the loans for livestock acquisition, water and electricity infrastructure, tractors and implements and fencing amongst other needs.”

Through its lending activities, the bank created and/or maintained 46,816 direct jobs in the agriculture in 2019, compared to 45,232 jobs in 2018.

“By creating about a third of all jobs in the agricultural sector, the bank plays a very important role in income generation and poverty alleviation,” noted Nghikembua.

As part of its corporate social investments drive, the bank took 6453 farmers and farming employees through its training and mentorship interventions in 2019, registering a 27 percent increase on the 5091 beneficiaries in 2018.

At the same time, the bank continued its sponsorship of three students doing veterinary medicine, as well as crop and animal sciences at the University of Namibia whilst also investing in its employees through leadership development and skills-specific programmes.

“Medium-term trends demonstrate that the bank is firmly on a positive trajectory. The rate of growth in interest income has changed from low levels on 1 percent in 2015 and 2016 to 6.4 percent in 2017, 12.8 percent in 2018 and 14.5 percent in 2019. The rate of growth in expenses on the other hand has decreased from high levels of 10 percent and 17 percent in 2015 and 2016 respectively to 11 percent in 2017, 7.8 percent in 2018 and 4.4 percent in 2019. During the same period, the bank registered a consistently increasing surplus position, in line with its sustainability strategy. Collections have steadily grown from N$157 million in 2015 to N$296 million in 2019. Despite the current depressed economic and harsh climatic environments, reasonable progress continues to be made on the collections front as more customers positively respond to the bank’s call to service their loan accounts,” Nghikembua extended.