Land Bank had taken a R1.8 billion knock on the chin for bad debt provisions that had pushed the bank into a R1.5 billion loss for the 15-month period under review, it said yesterday.

However, Monwabisi Fandeso, the bank's chief executive, said the bank anticipated it would recover as much as 80 percent over the next 18 months to 30 months.

Speaking at the release of the bank's annual results and release of its annual report, Fandeso said there had been a dramatic overhaul of the bank's operations.

"The most significant work done has been in arrears and recoveries," Fandeso said, adding that the bank had already recovered R350 million in arrears since December
'The decision to take the knock is strategic and once-off to get the bank on a sound footing' .

The decision to take the large provision knock was strategic, and was a once-off action necessary to put the bank on a sound footing.

"We don't want to come back with news like this year after year ... we have taken it on the chin so we can go forward."

Jethro Mbau, the chairman of the bank, said it had a new executive team, which had been at the bank for the past 18 months.

He said the previous executive team had focused more on their three to five year tenure at the bank with an eye fixed on their performance bonuses to make adequate provision for arrears and the long-term sustainability of the bank's loan book. 

Mbau explained the debt was not "bad" as such, but that by making a provision the bank was being pre-emptive.

The bank would use debt collectors to recover arrears from farmers who were taking advantage of the bank. It lends more than 50 percent of all the agricultural loans in the country.

"[It was] a mixed year generally for the sector with high producer prices and good yields," Mbau said.

Kgosi Tshikare, the general manager of finance, said the bank had changed its accounting period to bring the year-end to March instead of December. This was in line with the provisions in the Public Finance Management Act.

The results for a 15-month period are making it difficult to compare them with last year.

The income statement highlights showed the bank had lifted the net interest income for the year by 18.6 percent to R882 million. The bank approved R8.7 billion in loans compared with R8.3 billion last year.

It showed an operating profit before the provision of R574 million, compared with R485 million for 2001 when it made a bad debt provision for only R213 million and declared a net profit of R344 million.

Fandeso said while the bank was not in the business of crystal ball gazing, he believed the bank would be able to continue to produce the good underlying results achieved in the past year.