Land Bank Corporate Plan 2005/06 Presentation: Portfolio Committee on Agriculture - PowerPoint PPT Presentation

About This Presentation
Title:

Land Bank Corporate Plan 2005/06 Presentation: Portfolio Committee on Agriculture

Description:

Land Bank Corporate Plan 2005/06 Presentation: Portfolio Committee on Agriculture & Land Affairs Overview of Presentation Corporate Plan Overview The Turnaround Plan ... – PowerPoint PPT presentation

Number of Views:260
Avg rating:3.0/5.0
Slides: 47
Provided by: Rone184
Category:

less

Transcript and Presenter's Notes

Title: Land Bank Corporate Plan 2005/06 Presentation: Portfolio Committee on Agriculture


1
Land Bank Corporate Plan 2005/06Presentation
Portfolio Committee on Agriculture Land
Affairs
2
Overview of Presentation
  • Corporate Plan Overview
  • The Turnaround Plan
  • Financial Objectives
  • Non Financial Objectives
  • Questions and Comments

3
Land Bank Vision and Mission
  • Land Bank Vision
  • To be the leading provider of world-class
    financial services to agriculture and related
    rural sectors in South Africa
  • Land Bank Mission
  • Land Bank is an agricultural development finance
    institution that supports economic growth
    through the provision of retail, wholesale,
    project and micro-financial services to
    agriculture and related rural services

4

Land Bank Accountability
  • The State is the only shareholder, represented by
    the Minister for Agriculture and Land Affairs
  • Our activities are governed by the Land and
    Agricultural Development Bank Act, 2002 (Act no.
    15 of 2002) and financial management guidelines
    provided by the Public Finance Management Act
    (Act no. 29 of 1999)

5

Land Bank Strategic Framework
  • Our programmes are aligned with governments key
    strategic programmes in the agricultural sector
  • Agricultural Sector Plan
  • Integrated Sustainable Rural Development
    Programme
  • Comprehensive Agricultural Support Programme
    (CASP)
  • Shareholder Compact

6
  • The Land Bank Corporate Plan 2005/06
  • George Oricho
  • GM Strategy

7
Land Bank Priorities
  1. Implement more effective banking and financial
    business systems
  2. Implement processes and actions to ensure best
    practice and compliance with AC133
  3. Reposition the Bank to grow the commercial and
    development books
  4. Increase focus on financing BEE transactions, in
    terms of the Agri-BEE framework

8
Land Bank Priorities
  • Completing the Business Process Review by
    November 2004, to ensure
  • Improved productivity
  • Streamlined operations and
  • Enhanced customer service
  • Consolidate the management team
  • CEO candidate identified -- appointment process
    close to finalization
  • Senior management positions to be filled by
    November 2004
  • Continue to support Governments priority
    programmes
  • Land reform
  • Agricultural credit scheme
  • Food security

9
Important Economic Developments
  • Drought and delayed rains in Western Cape has a
    major negative impact on the agricultural sector
  • Strong rand causes great difficulty for
    agricultural exporters such as wine and citrus
    producers
  • Grain prices are extremely low, especially
    serious for maize producers
  • Carryover stocks in wine and maize sectors will
    continue to put downward pressure on prices
  • Sugar industry is benefiting from strong
    international sugar price

10
Land Bank Strengths
  • Land Bank has a well established brand name
  • Excellent relationships have been established
    with Provincial Governments
  • Staff has thorough knowledge of agriculture
  • A tailored range of products are available at
    competitive rates fees
  • Bank is regarded as loyal to the agricultural
    sector, friend in good and bad times
  • Branch offices offer local decisionmaking

11
Land Bank Weaknesses
  • Retail has relatively high delivery costs
  • Limited product range in a single, high risk
    sector
  • Lack of satisfactory computer information system
  • Insufficient outreach in deep rural areas
  • Turnaround times are excessive

12
Land Bank Opportunities
  • Client base will be broadened through MAFISA,
    AgriBEE and other shareholder initiatives
  • Footprint can be extend through co-op and
    agribusiness network
  • BEE acquisitions are business opportunities
  • Can develop innovative modern products for old
    and new markets
  • Land redistribution initiatives offer new
    possibilities
  • New tailored information system will increase
    market and service opportunities

13
Land Bank Threats
  • Loss of preferred status through revisions to the
    Land Bank Act
  • Loss of staff expertise
  • Workforce that lacks tools, motivation, training
  • Bad debts resulting from adverse economic or
    climatic conditions
  • Expectations that are not achieved in reasonable
    timeframe
  • International competitors in the face of
    increased variability in net farm income and
    increased cost of debt

14
  • The Land Bank Turnaround Plan

15
Commercial Loan Book,Trend Line and March 2005
Target
16
Development Loan Book,Trend Line and March 2005
Target
17
Arrears Amounts, Trend Line and March 2005 Target
18
Non Performing Loan Balances, Trend Line and
March 2005 Target
19
Return on Assets, Trend Line and March 2005
Target
20
Net Interest Margin, Trend Line and March 2005
Target
21
Efficiency Ratio, Trend Line and 2005 Target
22
Capital Adequacy, Trend Line and March 2005
Target
23
The Capital Adequacy Issue
  • Land Bank capital has been reduced significantly
    due to bad debt write-offs and the adoption of a
    new accounting standard known as AC133
  • This reduction impacts the financial ratios used
    by investors to assess the credit worthiness of
    the Bank
  • Erosion of capital results in a loss of investor
    confidence in the Banks ability to withstand any
    future financial shock

24
Sources of Potential Shock
  • Prolonged or severe drought,
  • Financial failure of one or more large borrowers
  • Persistent low commodity prices
  • A large drop in land values used as security for
    loans
  • Adverse consequences resulting from additional
    changes in accounting treatment
  • Continued strong rand

25
The Capital Adequacy Issue
  • Historically Land Banks capital adequacy has
    been kept above 15
  • In the past two years the ratio has fallen well
    below 15.
  • To provide sufficient cushion for possible future
    adverse events and to restore investor confidence
    in the financial strength of the Bank, a prudent
    capital adequacy level would be at least 20

26
Land Bank Role in Agricultural Transformation
  • The BEE transactions and other empowerment
    projects being financed or currently being
    considered for financing by the Banks CFU
    business is approaching R3.7 billion
  • The current Retail book to start up farmers
    amounts to R663 million
  • Step-Up adds another R74 million in loan volume

27
Land Bank Role in Agricultural Transformation
  • Since the Bank serves as one of the instruments
    of Governments effort to encourage and support
    black economic empowerment in agriculture, it is
    important that the Banks capital adequacy
    position be sorted out as a matter or urgency.
  • A higher capital adequacy ratio will improve the
    credit rating and dampen investor fears regarding
    the risk of lending funds to the Bank.

28
The Capital Adequacy Issue
  • An appropriation of R2 billion will increase
    capital adequacy ratio to nearly 20
  • Is adequate to shore up Banks financial strength
    and restore investor confidence
  • A capital injection will require Bank to
    implement a turnaround plan to ensure
  • profitability is maintained
  • sustainability is ensured
  • capital adequacy is maintained

29
The Turnaround Plan
  • Improving Management Capacity
  • Skills and experience
  • Organisational Structure
  • Training and development
  • Selection, recruitment and retention of skills
  • Reward, recognition and incentives
  • Performance management
  • Culture and values
  • Employment equity
  • Developing appropriate business models

30
The Turnaround Plan
  • Enhancing Bank Revenue Model
  • Pricing model
  • Net interest income
  • Non interest revenue
  • Creating new loan products
  • Creating non interest sources of revenue
  • Increasing client satisfaction
  • Understanding competitive environment and our
    clients

31
The Turnaround Plan
  • Controlling Costs
  • Cost to income ratio, operating efficiencies and
    increasing productivity
  • Loan book quality (Bad Debts)
  • Funding costs
  • Non interest costs
  • Expense reduction

32
The Turnaround Plan
  • Installing Information Systems and Processes
  • Implementation of Banking Solution
  • Reliable management information
  • Action plan management information
  • Improve client interface and integration
  • Enabling environment to manage risk and
    compliance

33
The Turnaround Plan
  • Managing Risk
  • Market risk
  • Interest rate risk
  • Enterprise wide risk management
  • ALCO process
  • Credit risk, liquidity, market, operating,
  • Banking risks and returns, profitability,
    liquidity, and solvency

34
The Turnaround Plan
  • Managing and Protecting Capital
  • Capital planning
  • Return on capital, economic value added
  • Development programme
  • Engage treasury
  • Capital injection

35
  • The Land Bank
  • Financial Objectives

36
Loan Growth
37
Business Efficiency
38
Loan Quality
39
Profitability
40
Capital Adequacy
41
  • The Land Bank
  • Non Financial Objectives

42
Non Financial Indicators
43
  • Questions and Comments

44
  • Thank You

45
(No Transcript)
46
(No Transcript)
Write a Comment
User Comments (0)
About PowerShow.com