During the 2022/2023 financial year, the Development Bank of Namibia inspected and assessed 63 projects valued at N$3.6 billion for compliance.
The DBN said it monitors the implementation and progress of remedial actions for the loan’s tenure. The frequency and duration of monitoring depends on the type of transaction financed and the level of risk.
“Where clients do not comply with environmental and social risk requirements, DBN works together with clients to achieve the necessary compliance standards,” the bank said.
During 2022/23 no active loans were terminated due to noncompliance. Construction and Business Services made up significant sectors due to the size of the projects in those sectors.
The DBN is currently challenged by lagging revenue collection due to Covid-19 relief initiatives and a number of nonperforming loans.
The bank said it has implemented initiatives to reduce the material impact of non-performing loans and normalise collections.
This includes implementation of portfolio management strategy, implementation of recovery lending supported by Bank of Namibia and KfW Bankengruppe, and a business rescue initiative.
During the past three years from 2020 to the present, DBN has had to shift its priority from growth to preservation of the economy and its investments in its existing borrowers.
“Interventions such as repayment holidays for all borrowers in the hospitality, SMEs and transport and logistics industries to any other borrower meriting it had to be implemented. This has had an impact on DBN’s financial performance and the quality of its loan book,” the bank said.
The DBN said it has now shifted to recovery strategies. These notably include recovery of nonperforming loans (NPLs) through positive measures such as renegotiation and restructuring of loan contracts, the
Business Rescue Scheme which seeks to identify enterprises which will benefit from turnabout strategies and possible conversion to equity, as well as recovery lending supported by the Bank of Namibia and KfW Bankengruppe
As a result of the significant impairments on loans and advances experienced, DBN recorded a net loss of N$269.8 (2022: net loss of N$184.5 million).
The bank has now adopted an aggressive loan book clean-up exercise on the back of a drawn-out economic recovery that cast doubt on the quick recovery of specific industries and borrowers.
