Mon, 28 Sep 2020

The Development Bank of Southern Africa (DBSA) has warned that full year profits will fall as the lender expects some of its clients to struggle as a result of the Covid-19 pandemic.

The state-owned bank expects profits to be lower for the year to end-March "due to the bank adjusting for the estimated effects of the Covid-19 pandemic on the performing loan portfolio by increasing expected loss provision," it said in a statement on Monday.

"Given the current deterioration in the macroeconomic base, the Bank expects a rise in expected credit loss provisions as clients get affected."

Commercial lenders such as Standard Bank have come under significant pressure as a result of the pandemic and the subsequent lockdown of the SA economy. Last week, the lender said lower transaction volumes due to depressed spending and decreased loans and debt relief for its customers had negatively impacted on its earnings by some R2 billion.

The unlisted DBSA is expected to play a key role in the state-driven infrastructure projects that are meant to boost an ailing SA economy that is expected to contract in double digits this year. In recent weeks, the bank has been mooted as a possible funder of the approved business rescue plan by South African Airways business rescue practitioners.

The development finance institution, whose annual results are due at the end of September, at the beginning of this year loaned the troubled airline's business rescue practitioners R3.5 billion.

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