admin“This was despite the bank having successfully negotiated the second tranche of the IDCSA US$30 million, since late disbursement of the facility constrained efforts to recoup from the facility expenses incurred during the year,” the bank said in a statement accompanying the results.
The bank also attributed the loss to the disproportionate increase in impairment charges that were in excess of US$3,8 million for the period under review.
“The loss was mainly due to the disproportionate increase in impairment charges well in excess of US$3,8 million for the year.
“The impairment charges reflect loan exposures to a few large corporate entities which are under judicial management and provisions have been appropriately provided for based on current information available,” read the statement.
Operating expenses for the bank grew by 16 percent to US$22,4 million in December 2012 from the prior period where the expenses stood at US$19,3 million while on the other hand operating income recorded a mere 3,4 percent growth from US$19,33 million in 2011 to US$19,98 in 2012.
“The low growth in operating income particularly reflects the constrained trading book due to the amplified banking sector liquidity challenges characteristic of the economy over the past few years,” added the statement.
The bank’s total asset base increased by 24 percent from US$102,7 million the prior period to US$127,7 million the period under review with more than half total the figure attributable to loans and advances to customers.
“Agriculture accounted for 41 percent of loans and advances followed by manufacturing at a distant 28 percent, individuals 11 percent, distribution 10 percent while services accounted for 9 percent and mining contributing 1 percent,” said the bank.
On the bank’s equity, issued share capital remained unchanged at US$11,9 million while shareholder capital contribution increased 56 percent up from US$19,5 million to US$30,5 million.
The bank’s first tier capital amounted to US$20,43 million as at December 31 2012 against the stipulated minimum capital requirement of US$25 million while Government under the Agricultural facility availed to them US$10 million out of the supposed amount of US$15 million.
This has significantly contributed towards the bank’s efforts in increasing their capitalisation level.
“The bank, however, expects to meet the capitalisation level in 2013 on the backdrop of envisaged further capital injection by the shareholder and also anticipated equity uptake by the strategic partner as part of the privatisation process,” said the bank.
In an effort to turn around their fortunes, the bank says it has put in
place strategies to ensure business growth and this is predicated on recovery of the agricultural sector and mining sector growth which is critical in ensuring a sustained economic growth.
Agribank says the banking sector which plays a critical role in economic growth has failed to live to its task citing the liquidity crisis and, therefore, they
generally cannot afford to raise meaningful funds from potential sources and cannot fully fund sectoral demands, particularly productive sectors of the economy.
“The bank envisages engaging more international institutions for additional lines of credit following the success of the IDCSA and other facilities,” added the statement.
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