Resuming loans with an R1.95 billion blended finance programme is Land Bank

Resuming loans with an R1.95 billion blended finance programme is Land Bank

The Land Bank has begun new lending activities to commercial farmers after a two-year suspension and will be actively pursuing clients who owe it more than R12 billion in outstanding debts.

The bank claimed that the resolution of client facilities had the obvious result of reducing its loan book concurrently with the reduction of its liabilities and causing an increase in the NPL ratio.

The Land Bank stated that it was putting a plan in place to address its sizable non-performing loans (NPLs) portfolio in its integrated report, which was published yesterday.

The board has given this issue of a declining overall loan book quality additional attention, according to Thabi Nkosi, chair of the Land Bank.

‘I am glad that the bank’s NPL rehabilitation efforts have begun to bear fruit with a drop in the NPL book from R13 billion in February 2022 to R12.3bn in March 2022 and then R12.1bn in June 2022,’ Nkosi added.

Nkosi said that they had created and started implementing a strategy to deal with the problem of NPLs, the majority of which were created by the bank’s former cohort of intermediaries.

“As part of this initiative, the bank is working very hard to maintain the performing clients by making the proper interventions to help them with the financial needs required to maintain their operations.

Also being closely watched and monitored is the bank’s ability to improve its capacity for debt recovery and collection.

The Land Bank yesterday unveiled an R3.2 billion blended finance programme in collaboration with the Department of Agriculture to help struggling farmers. The department will invest a minimum of R3.2 billion during the course of the program’s 10-year implementation.

According to the agriculture and agroprocessing master plan, the cash will be provided via a blended finance structure, a combination of a grant and a loan. According to the R325 million annual investments made by the department and Land Bank, a fund of R650 million will be created each year and will total R1.95 billion by the end of the third year.

Direct access to the blended finance programme will be provided by the Land Bank, and the department will have supervisory responsibilities, including reporting to all pertinent entities. In order to increase producers’ access to financing, agriculture minister Thoko Didiza stated that conversations and expressions of interest from other private banks had reached an advanced stage.

According to Didiza, “strategic alliances like this are essential to ensure growth, food security, farmer development, agricultural sector reform, and contribute to employment creation.” When the cash-strapped bank missed interest payments due on its R50 billion listed notes in April 2020, a cross default on nearly all of its borrowings resulted, sending the bank into a catastrophic liquidity crisis.

By the end of the fiscal year 2021–2022, the Land Bank had reduced its outstanding debt with its lenders by 28.4% since the default began, and by June 2022, it had reduced its total debt capital by 42.8%. According to Finance Minister Enoch Godongwana, “This achievement would not have been achievable without the efficient collection of customer repayments, settlement of their accounts, and the decrease of the bank’s loan book.”

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