LAND BANK PRESENTATION - STANDING COMMITTEE ON FINANCE 9 SEPTEMBER 2014

Transcription

1 LAND BANK PRESENTATION - STANDING COMMITTEE ON FINANCE 9 SEPTEMBER

2 FINANCIAL HIGHLIGHTS (GROUP) FY2014 FY2013 Var % Profit for the year R R % Total Comprehensive Income R 394.3m R 304.6m 29.5% Operating income from banking operations R 769.6m R 735.7m 4.6% Operating profit from insurance operations R 9.0m R 16.3m (44.8%) Profit from continuing operations R 400.9m R 342.2m 17.2% Cost to income ratio continuing operations 59.5% 67.7% (8.2%) Net cash position R 1.47bn R 1.89bn (22.2%) Capital adequacy ratio 25.9% 24.4% 1.5% Performing loan book (gross) R 33.0bn R 26.5bn 24.5% Non performing loans ( NPLs ) R 1.09bn R 1.38bn (21.0%) NPLs as % of the loan book 3.2% 4.9% (1.7%) 2

3 LAND BANK MANDATE The Bank s objectives flow from the Land Bank Act, and are aligned with government policies and the country s socio-economic needs. The Bank is expected to play a pivotal role in advancing agriculture and rural development. Our broad mandate, as expressed in the Land Bank Act, covers 11 objectives 3

4 LAND BANK ACT OBJECTIVES Equitable ownership of agricultural land, in particular the increase of ownership of agricultural land by historically disadvantaged persons; Agrarian reform, land redistribution or development programme aimed at historically disadvantaged persons; Land access for agricultural purposes; Agricultural entrepreneurship; Removal of the legacy of racial and gender discrimination in agriculture; Enhancing productivity, profitability, investment and innovation; Growth of the agricultural sector and better use of land; Environmental sustainability of land and related natural resources; Rural development and job creation; Commercial agriculture; and Food security 4

5 OBJECTIVES CLASSIFICATION The Bank has classified its mandate into the three themes transformation, growth and integration described below. 5

6 LAND BANK VISION To be a fully integrated development finance institution that promotes, facilitates and supports agricultural and rural development through the provision of financing solutions. 6

7 LAND BANK MISSION Our mission is to: Promote and facilitate access to ownership of land by the historically disadvantaged; Increase levels of productive agricultural land use; Assist emerging farmers with finance and technical support; Finance commercial farmers Promote agricultural entrepreneurship Contribute to food security and facilitate poverty eradication Facilitate rural development and job creation 7

8 ECONOMIC CONTRIBUTION ECONOMIC IMPACT: The composition of the Loan book : approved and disbursed Approvals Disbursement 8

9 ECONOMIC CONTRIBUTION ECONOMIC IMPACT: SAM model estimates the direct, indirect and induced development impact of the Bank s lending activities on the economy. estimates economic and Socio-economic impacts Performance 2013/14 Bank approved loans to the value of R14 569m. Disbursements amounted to R million 9

10 ECONOMIC CONTRIBUTION Impact on National GDP 1,6% or R48,2 Billion Nr new jobs created Nr of jobs maintained (across the value chain) One employment opportunity constitutes 240 days worked per year MT and LT Loans (R2,9bn), 6.9% Disbursements FY 2014 (R43,2Bn) St Loans (R40,2bn), 93.1% 10

11 FINANCING EMERGING FARMERS Retail Emerging Market (REM) Established in 2011 Dedicated division to respond to challenges of financing Emerging farmers such as: Onerous collateral and security requirements High cost of funding based on risk resulting in high interest rates High rates of defaults resulting from little or no support to the farmers Little or no integration of the agricultural value chain for emerging farmers A lack of dedicated focus to emerging farmers 11

12 FINANCING EMERGING FARMERS The Solution REM model unique value proposition: Cash flow lending based approach Concessionary funding and interest rates Non financial support (end to end on farm support) Cashless disbursement Innovative forms of security 12

13 REM FUNDING MODEL Pays approximately Prime +7% Financial markets Land Bank Intermediaries/Co-ops /Direct Emerging Farmers Borrowing at 6%+ From 2002/3 to 2007/8 Land Bank wrote-off R4 billion in Bad Debts to Emerging Farmers Government Support Model On-lend to farmers from 4% Financial markets Land Bank Intermediaries Emerging Farmers Borrowing at 6%+ On-lend to intermediaries at 0% Reimburse 4% Subsidy 4% DAFF 13

14 REM FUNDING MODEL DEVELOPMENT FUNDING MODEL Land Bank Government funding Multilateral funding Retail Emerging Markets Retail Commercial Banking; and Business & Corporate Banking Land Bank Insurance Company % profit for development % profit for development 14

15 REM EXPOSURE AS AT 31 MAR 2014 Total approved R583 mil Total disbursed R391 mil 15

16 REM MODEL IMPACT 31 MARCH 2014 Farmers financed 365 Permanent employees Seasonal/temporary employees 793 Beneficiaries impacted Hectares farmed (owned) Leased/communal hectares farmed Farmers receiving mentorship 415 Farmers attended training programs

17 NATIONAL DEVELOPMENT PLAN Vision 2030 Integration of rural economies through: successful land reform job creation poverty alleviation potential to create one million jobs 17

18 NATIONAL DEVELOPMENT PLAN LAND BANK S ENVISAGED ROLE Bank s expertise Provision of loan funding Special lending products Tailored screening of potential beneficiaries Selection of candidate farms acquisitions Provision of technical support Partnerships Commercial Farmers for specialised mentorships Existing Intermediaries / clients for comprehensive business and farming solutions Governments Dept. for co-ordinated farmer support programmes Co-ordinated funding for NDP programme 18

19 CHALLENGES/CONSTRAINS Development Funding Private investor Lack of risk appetite for development Difficulty in raising appropriate & affordable funding from the Financial Market Misaligned state programmes to fund agriculture projects Sustainability Capital Adequacy Ratio Targeted Growth review Cost to Income review Investor/Fitch concerns

20 CHALLENGES/CONSTRAINS NDP Capacity Formalisation of intention Funding Provision Projects

21 THANK YOU 21