State-owned development finance institution Development Bank of Southern Africa (DBSA) has reported a record R3.8-billion net profit for the financial year ended March 31, showing a profitability increase of more than 168% from R1.4-billion in the previous financial year.

“Our stellar financial results are truly meaningful when looked at through the lens of lives impacted by the bank. Driven by a concerted effort to bend the arc of history towards shared prosperity, we are pleased that the end of the 2021/22 financial year came with improved livelihoods for many of our citizens,” said DBSA CEO Patrick Dlamini on August 19.

The profit increase was influenced by an 18% growth in net interest income from DBSA’s core lending activities over the prior year. Other factors that influenced the positive results include stabilisation of expected credit losses which reduced impairment charges, increases in cash collections and repayments from development loans, and effective cost containment strategies.

“The economic fallout from the pandemic spurred the implementation of innovative monetary and fiscal policy measures across the world. While economies deal with the lingering disruption to economic activities, such as supply chain issues, it has been prudent to continue to project conservatively as overall recovery might be delayed.

“Our infrastructure-led recovery has been an important driver of post-lockdown recovery . . . we have remained focused on our mandate and pursued our growth strategy, emphasising our catalytic role towards sustainable infrastructure development,” Dlamini said.

During the period, the DBSA was able to deliver infrastructure to the total value of R33.4-billion, of which R15.1-billion was infrastructure catalysed. Thirteen projects were successfully completed at local government level, while infrastructure unlocked within under-resourced municipalities amounted to R2.1-billion.

The DBSA reported continued strong capital buffers for unexpected loss events. The total equity base increased by R3.8-billion from R39.1-billion last year to R42.9-billion at March 31. The debt-to-equity ratio improved to 88% from a prior year ratio of 101%.

Overall, the bank reported that it remained well capitalised, and the ratio remained well below its regulatory debt-to-equity ratio cap of 250% according to the DBSA Act. This provides the DBSA with an opportunity to gear the capital further in financing infrastructure investments.

The DBSA reported that its liquidity holdings remained high relative to the pre-Covid-19 period. Contributing to this is the bank’s success in raising funding from international and local commercial banks, as well as the local fixed income market.

The bank’s total debt funding decreased by about R3-billion, from R59-billion last year to R56-billion this year owing to the repayment of debt funding.

“We continue to meet our infrastructure development mandate through lending and non-lending activities across all spheres of government and beyond. Key in our growth strategy is ensuring that we increase developmental impact using our own balance sheet, and through partnering with other local and international players,” Dlamini said.

Development loan disbursement activities amounted to about R12.9-billion a year ago, compared with R13.5-billion as at March 31. Cash collections and client loan repayments on the development loans amounted to about R19-billion, of which R12-billion was principal or loan capital repayments, while R7-billion was interest received from clients.

“Looking ahead, we have a healthy pipeline of projects that provide for a solid springboard for success in the future,” Dlamini said.