Agribank blames sanctions for loss

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Agribank posted a loss after tax of $8,2 million for the financial year ended December 31 2010 which it has attributed to the liquidity challenges and sanctions.

Cabinet has already authorised the cash- strapped bank to seek strategic partners as the government intends to offload its shareholding.

The bank’s loan-to-deposit ratio was way ahead of the industry average of 70% at 93%.

“This performance was a result of liquidity challenges and the negative impact arising from the bank being on the United States of America sanctions list,” said Agribank chairperson Sijabuliso Biyam in a statement accompanying the bank’s financial results.

Operating income was up 314% to $10,6 million while operating costs totalled $18,1 million. Included in the operating costs were retrenchment costs amounting to $1,7 million.

During the year under review, the bank managed to clear a $1,3 million debt it owed to an information communication technology service provider.

“The board is confident that the ground work has now been set for the bank to turnaround its fortunes and begin to return profitability,” said Biyam.

The bank said it was in the process of
implementing a five-year strategic plan that includes branch rationalisation which has resulted in the closure of nine branches as well as voluntary retrenchments. At least 160 employees have so far been retrenched.

“The strategic thrust going forward is to aggressively mobilise deposits and access additional lines of credit. The bank welcomes the decision by Cabinet to allow it to look for strategic partners in order to increase its capital base,” said Biyam.

Last month the International Development Corporation of South Africa (IDC-SA) extended a $30 million credit line to Agribank. The facility has a tenure of six years.

Speaking at last month’s IDC-SA event Agribank chief executive officer, Sam Malaba said $20 million would be allocated to companies with interests in agro-processing, horticulture, fertiliser and food processing among others.

“The other $10 million will be disbursed towards IDC Zimbabwe subsidiaries,” he said.