DBSA reports 12% decline in FY profit

The Development Bank of Southern Africa (DBSA) has released its annual financial results, showing an 11 per cent drop in net profit to R4.6 billion, primarily due to lower foreign currency gains. However, when excluding the currency effect, the bank's sustainable earnings actually increased by 7 per cent, fueled by a double-digit growth in net interest income. Zodwa Mbele, the CFO of DBSA, emphasized that the drop in net profit was not a setback for the bank, attributing it to minor fluctuations in foreign exchange gains and revaluation losses on financial instruments. Despite these challenges, Mbele highlighted the bank's solid operational performance and healthy economic fundamentals, evidenced by the record disbursement numbers of 17 billion, the second highest in seven years. The disbursements were mainly directed towards municipalities, the Renewable Energy Programme, and other infrastructure projects in South Africa and other African countries. Mbele reassured stakeholders that the municipalities continue to service their debts, with DBSA taking a proactive approach to restructure loans for distressed clients. The bank's high-risk tolerance allows for flexibility in managing potential defaults and ensuring repayments are received over time. The CFO also discussed the bank's provisions for expected credit losses, which increased to 1.4 billion Rand during the year. Mbele clarified that these provisions are forward-looking and not indicative of actual defaults, with a focus on macroeconomic variables of clients and proactive risk mitigation strategies. She elaborated on specific provisions made for clients in West and East Africa, emphasizing DBSA's commitment to collaborating with clients on restructuring agreements to recover funds. The interview also touched on opportunities for the bank in the future, highlighting South Africa's green hydrogen projects, municipal infrastructure, and transmission line development as key areas of focus. Additionally, DBSA is eyeing opportunities in logistics, regional integration projects in East Africa, and infrastructure developments in Francophone countries. With a strong pipeline of projects, the bank remains optimistic about its role in financing and supporting sustainable development across the continent. In conclusion, Zodwa Mbele reiterated DBSA's commitment to driving growth and resilience under challenging economic and political conditions. The bank's strategic approach to risk management and proactive engagement with clients position it well to navigate uncertainties and seize opportunities in the evolving landscape of infrastructure finance in Southern Africa and beyond.