Agribank loans under-secured by N$341.3 million
The Agricultural Bank of Namibia (Agribank)’s loans are under-secured by N$341.3 million, a situation that exposes it to risks of financial losses, a report from the Auditor-General, Junias Kandjeke has revealed.
The information is captured in the bank’s 2017/18 audit report issued by Kandjeke and submitted to the National Assembly by finance finister, Calle Schlettwein on Wednesday.
“As at 31 March 2018, the bank’s loans were under-secured by N$341 276 000 (2017: N$318 207 000) accounting for 12% of the loan book,” the report said.
A secured loan means that in the event of default, a given asset can be used as collateral by the lender to repay the funds it has advanced the borrower.
“This exposes the bank to the risk of losses in the event of debtors defaulting on payments,” the auditor-general said.
Kandjeke also states in the report that loan repayment in arrears at the date of reporting remain high at N$549.3 million.
During the period in question, Agribank’s loan book grew by 6%, which Kandjeke attributed to new loans disbursed, interest charged and net recoveries collected.
At the end of the period under consideration, the arrears constituted 20% of bank’s loan book, compared to 21% in 2017, the report further shows.
The high level of arrears is putting pressure on the bank’s cash flow position and to arrest the situation, Kandjeke told the bank to put more effort into debt collection and register additional bonds and securities for loans that are under-secured.
“For new loans, the bank should consider registering bond amounts that are higher than the approved loan amounts,” Kandjeke recommended.
In a response, also contained in the report, Agribank’s management indicated that they have adopted a new collection policy.
“[Agribank’s] recovery division has commenced with aggressive actions on accounts that are older than four years. This action plan started on 16 June 2018,” reads a response from the managers.
The initiative includes listing of non-responsive clients on credit bureaus and moving them to the legal collections stage much faster.
“Effective 23 August 2018, non-responsive clients will be listed on credit bureaus, whilst approval for legal action in respect of these clients will be sought by 31 August 2018,” it reads.
-Nampa
The information is captured in the bank’s 2017/18 audit report issued by Kandjeke and submitted to the National Assembly by finance finister, Calle Schlettwein on Wednesday.
“As at 31 March 2018, the bank’s loans were under-secured by N$341 276 000 (2017: N$318 207 000) accounting for 12% of the loan book,” the report said.
A secured loan means that in the event of default, a given asset can be used as collateral by the lender to repay the funds it has advanced the borrower.
“This exposes the bank to the risk of losses in the event of debtors defaulting on payments,” the auditor-general said.
Kandjeke also states in the report that loan repayment in arrears at the date of reporting remain high at N$549.3 million.
During the period in question, Agribank’s loan book grew by 6%, which Kandjeke attributed to new loans disbursed, interest charged and net recoveries collected.
At the end of the period under consideration, the arrears constituted 20% of bank’s loan book, compared to 21% in 2017, the report further shows.
The high level of arrears is putting pressure on the bank’s cash flow position and to arrest the situation, Kandjeke told the bank to put more effort into debt collection and register additional bonds and securities for loans that are under-secured.
“For new loans, the bank should consider registering bond amounts that are higher than the approved loan amounts,” Kandjeke recommended.
In a response, also contained in the report, Agribank’s management indicated that they have adopted a new collection policy.
“[Agribank’s] recovery division has commenced with aggressive actions on accounts that are older than four years. This action plan started on 16 June 2018,” reads a response from the managers.
The initiative includes listing of non-responsive clients on credit bureaus and moving them to the legal collections stage much faster.
“Effective 23 August 2018, non-responsive clients will be listed on credit bureaus, whilst approval for legal action in respect of these clients will be sought by 31 August 2018,” it reads.
-Nampa
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