Picture: GALLO IMAGES
Picture: GALLO IMAGES

The Land Bank, one of the remaining profitable state-owned enterprises that do not not require government support, has announced a difficult first six months that has swung it into the red.

The bank, which provides financing to established and emerging farmers, posted an interim loss of R184.7m for the six months ending September 2019.

The company attributed the worsening of its financial situation to muted loan book growth and a higher impairment charge, which rose by R193m from the previous corresponding period.

Nonperforming loans increased to 9.9% from 5.8%. The bank attributed this to the “shifting in seasons” resulting in late harvests and loan repayments.

“Clients are still recovering from the prior year’s droughts,” it said. Sporadic outbreaks of foot-and-mouth disease also impacted the performance of loans. 

The Land Bank was one of the first to warn about the negative effects of the ANC’s proposed land expropriation without compensation, saying it would have a number of negative consequences for the company as well as for the agricultural industry. 

The bank has negligible support from the government and continues to alter the composition of its funding by shifting to more longer-term sources of capital. 

The bank says its more costly short-term funding, which comprises debt with maturity of less than twelve months, now accounts for only 49% of its overall liabilities. 

Its cash and liquidity position “remains healthy” with access to cash of R6.5bn.

thompsonw@businesslive.co.za