Profitable Land Bank created 13,335 new job opportunities

DFIs became involved when markets failed to deliver the country's economic objectives such as job creation.

"This is particularly crucial in agriculture, where South Africa continues to grapple with historical imbalances and to search for innovative and considered ways of transforming the sector," Gordhan said.

The Land Bank was expected to play a larger role in development and to make a meaningful impact on the economy. In particular, it should increase its market share, he said.

Already, 13,335 new job opportunities had been created by the end of the financial year.

"The decision to recapitalise the bank has proved successful, as it has already started paying dividends," he said.

"This has allowed the bank to focus on fulfilling its mandate."

Government was pleased that the bank had exceeded all development targets for the 2012 financial year.

A new banking division, Retail Emerging Markets, focused on helping small-scale farmers to attain commercial maturity.

Development farmers benefited from the more affordable rates offered by the bank's Wholesale Finance Facility.

Chairman Ben Ngubane said the Land Bank had performed well against commitments set in the previous year.

"The board agreed on certain business growth targets, which have been achieved," he said.

It had ensured its systems were workable and had entrenched a viable, sustainable business model.

The Land Bank received R750 million from government during the 2012 financial year as part of its recapitalisation.

A further R200 million was paid on 30 April.

"It is anticipated that the Land Bank will continue to receive further recapitalisation and guarantees in the medium term in light of its strategic role in development and food security," the bank said.

Government support, as well as the bank's own turnaround initiatives, saw core earnings improve.

Profit for 2012 dropped to R161.4 million, compared to the prior year's restated profit of R265 million -- a 39.1 percent decrease.

However, if an impairment write-back of R137.5 million was excluded, group profit increased by R33.9 million, an increase of 26.6 percent.

This was attributable to growth in the loan book and a well-managed borrowing plan.

Total gross loans increased by 46.8 percent to R22.4 billion.

The bank's performing loan book grew by 54.5 percent over the past year, from R13.6 billion to R21 billion.

Non-performing loans had decreased from R3.2 billion in 2009 to R1.4 billion in 2012.

Controls had been improved, including governance systems.

It had begun implementing a risk management plan with an annual disclosure checklist.

"The bank now enjoys proper control systems and appropriate credit and risk policies and processes," said Ngubane.

"Investor appetite for Land Bank bonds continues to grow and liquidity is no longer a challenge."

Last year, Gordhan announced the Land Bank would spend up to R1 billion over two years on emerging farmers.

Source: Sapa