A sneak peek into NDB’s long pending financial results

This reporting season, companies shared financial results for fiscal years ended from December 2014 all the way into the first quarter of 2015. The latest companies being two tourism outfits of Wilderness Holdings and Chobe Holdings, both for the financial years ended February 2015. But the National Development Bank (NDB), the wholly Botswana Government owned bank established to provide innovative financial products and services to promote economic development, is yet to  release financial results for the year ended March 2014. Last week, the bank released a statement promising that the results will be released “… any time from now after they have gone through the relevant governance approval structures.”

The statement points to a subdued performance with operational loss amounting to P86.4 million. However, according to the Chief Executive Officer (CEO), Lorato Morapedi, whose contract was recently renewed by cabinet, the bank’s financial position is strong with its asset base having grown 11.6% to P1.58 billion. The bank, which is on course to commercialize and list on the Botswana Stock Exchange (BSE), was supposed to have released the results latest in September 2014, six months after the end of the financial year in fulfilment of BSE rules. However, the bank could not meet the deadline, and instead pushed the deadline to the end of November 2014. This deadline was still not met and was extended further to the 31st of March 2015. Still, this deadline was not met. Hopefully, according to the recent statement from the bank, the results will finally get released soon.

And why are the results delayed? Gazette Business asked NDB in April why the results were delayed and Brian Ketshabile, Marketing and Communications Specialist at NDB, had pointed to the core banking system that the bank purchased in preparation for commercialization as the main reason. He had said, “As with most systems, there were teething problems with adapting the system to the organization. The system captured much more variables than the bank’s old system and to satisfy the new system, a forensic audit had to be carried out. That’s what delayed the results.” End of March 2015 marked an end of yet another financial year, so two financial years reports are pending. However, Ketshabile had assured this publication that the audit was done and that financial results had been submitted to the regulator, Bank of Botswana (BoB), for approval. However, a source within the central bank pointed to an unsavoury set of results. The source explained to this publication that NDB is not regulated by the BoB, rather is supervised by the Ministry of Finance and Development Planning (MFDP). “The MFDP had approached the central bank for technical assistance in reviewing the results to give the whole process credibility. While the BoB approved the results, it was out of a lack of framework within which to place NDB because it is not a commercial bank. Had the results come from a commercial bank, the BoB would have rejected them and levied a penalty for late submission,” said the source.