ANNUAL REPORTS

Financial and development investment overview
The year under review was once again dominated by
challenging economic and market conditions. Compared to
the previous year, it has been characterised by lower shortterm
and higher long-term interest rates on investments.
Consumer debt levels remain low, which resulted in
above-normal liquidity levels in the market. As a result,
the commercial financial services sector could increase its
investments in infrastructure development, at cost-effective
rates for both borrowers and lenders. As the Treasurer’s
report indicates, government bonds consistently traded
at rates above JIBAR, especially in the medium- to longterm
range, while short-term paper traded at significantly
lower levels.
“The balance sheet is robust,
and with the support of the
shareholder, the Bank will
maintain its strong financial
sustainability into the future.”
Pieter de la Rey
DBSA Group Chief Financial Officer
This allowed the DBSA’s new investments in South Africa
and the region to stabilise. The Bank made a significant
internal investment in preparation for the coming phase
of development, in line with the revised strategy. While the
financial position of the Bank remains exceptionally strong,
as evidenced by the low debt-to-equity ratio and healthy
earnings ratios, the current strategy will rely on continued
support from its shareholder.
During the year, the equity market showed great cyclical
variability, with a general downturn in the last quarter.
This is evident from the unrealised revaluations reflected in
the financial position. The Bank’s equity investments are
strategic, not speculative, supporting its development role
and the risk management of the larger investments, where
applicable. While equity movements do create volatility
in the statement of comprehensive income owing to the
classification, they do not create instability in the Bank’s
financial position.
The Bank managed its financial operations well; it realised
expense savings of around 10%, which allowed it to
maintain its spending on social and economic development.
The investment book remains well managed and nonperforming
loans are well within acceptable limits.
In the course of the year, the financial systems were
successfully migrated to a SAP platform, without any impact
on the Bank’s accounting or audit results.
Much of the year was invested in financial planning
and strategy to prepare for the scaling up of the Bank’s
infrastructure investments. The balance sheet is robust, and
with the support of the shareholder, the Bank will maintain
its strong financial sustainability into the future.
30 DBSA DBSA | ANNUAL | ANNUAL REPORT REPORT 2010/11 2010/11