But its financial woes are still far from over. The bank expects to record a loss of more than R1bn for its 2021 financial year. Image: Waldo Swiegers/Bloomberg The embattled state-owned Land & Agricultural Development Bank says it has paid R11.4 billion to its lenders, which has resulted in a 28% reduction of its debt since it defaulted on its funding liabilities in April last year.
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The bank says it has been able to reduce the funding debt through its normal collections of client instalments, settlement of facilities as clients move to other financial institutions, and disposal of non-core assets.
“Some of this funding has been used to provide much needed support to the existing clients of the Land Bank,” the bank said. “The bank has geared itself to fully support existing clients with working capital and production facilities in the planting season that is upon us.” Land Bank’s turnaround strategy comes after it asked creditors about two months ago to approve a debt repayment plan that would run over the next five years and save it from collapse.
Its financial position has been boosted by a government bailout of R3 billion from last year and another R7 billion early this year, which will be paid out over the next three financial years.
The Pretoria-based bank, which provides loans to both emerging and established farmers, says this capital injection is intended to reduce debt and provide a baseline for its future growth.
Although its financial distress is declining, the bank still expects to record a loss of R1.06 billion for its 2021 financial year, which will mark its third consecutive year of failing to turn a profit.
“The event of default has caused considerable strain on the bank’s operations and reduced its ability to support the sector and service existing debt,” it said.
“In the absence of any new funding flowing into the bank, the ability to perform these key functions remains significantly constrained.”
Nonetheless, the bank says it is adamant about turning the dire situation around and has “recorded some progress in critical areas of the stabilisation exercise, in collaboration with the lenders and funders with the support of its shareholder”.
The bank says it has embarked on a process of insourcing some its externally managed loan books while implementing the approved Remediation Plan in response to the negative findings of the Auditor-General of South Africa.“The bank has also developed […]
