The Development Bank of Southern Africa (DBSA), which provided R4.5 billion loan finance to Johannesburg and Tshwane municipalities on Friday for services and infrastructure development, will disburse 75 percent more in loans in 2020 than it did in 2019.
The bank said yesterday that its liquidity and capital position remained strong, despite the recent Moody’s Investors Service downgrade of the DBSA’s credit rating to a notch further into the below investment grade category.
The bank said that it had successfully raised funding from international development finance institutions as well as international and local commercial banks, notwithstanding, the disruption to the capital market.
Debt-to-equity for March 2020 was expected to remain well below its regulated debt-to-equity ratio cap of 250 percent.
The ratio of shareholder capital to total assets as at end-March 2020 expected to be 37 percent.
The bank had not offered any blanket relief to clients as a result of the Covid-19 pandemic.
It said yesterday that given the macroeconomic deterioration, the bank expected to see a rise in credit loss provisions, as clients would be affected by the weakening economy.
However, the IFRS 9 Stage 3 non-performing loan ratio was expected to be in line with a half-year ratio of about 7 percent.
“Current estimates are that the bank will remain profitable. The full year profits to March 2020 will, however, be lower than in 2019 due to the bank adjusting for estimated effects of the Covid-19 pandemic on the performing loan portfolio, by increasing expected loss provision. A 'cost optimisation strategy' would see the cost-to-income ratio for March 2020 track below the internal limit of 35percent," the bank said.
The financial results for the year ending on March 31, 2020, were expected to be published around September 30.
DBSA head of Metros Tshepo Ntsimane said on Friday that the bank was playing a critical role in stepping in to plug market deficiencies, as other infrastructure lenders and investors were pulling out of massive capital programmes because of market uncertainty.
The DBSA has a R150 million Covid-19 response programme to assist seven provinces and 25 districts, to bolster government and private sector initiatives as they fought the pandemic.
Last month, the bank also provided loans of $120 million (R2.04billion) for Mozambique’s Area 1 Liquefied Natural Gas project.