The DBSA has published its financial results for the year ended 31 March 2026 on the JSE Limited’s Stock Exchange News Service (SENS). These results, prepared in accordance with International Financial Reporting Standards (IFRS), provide comprehensive financial information to the stakeholders. The annual financial statements and annual report are available on the DBSA website.
Context of Financial Performance
The DBSA’s growth strategy remains focused on catalysing development, fostering partnerships, and mobilising resources to address developmental challenges and unlocking the full potential of the African continent. The DBSA aims to create lasting sustainable development outcomes through infrastructure development and strategic partnerships within the confines of our balance sheet.
The macroeconomic landscape deteriorated with the global growth outlook revised lower, as reciprocal tariffs introduced new challenges in 2025, changed the global trade dynamics, increased geopolitical tensions, led to higher costs of doing business, disrupted market access and global supply chain.
This was worsened by the sharp escalation of the geopolitical tensions in early 2026 which culminated in the war within the Gulf Region. This resulted in damage to oil infrastructure, disrupted the key trade route of the Strait Hormuz and disrupted trade, resulting in oil price increases which pushed global inflation above central bank targets.
The sovereign debt vulnerabilities remain elevated on the rest of the African continent, impacting long-term growth and social fabric as more resources are channelled toward debt service rather than investment in social and human capital development. Additionally, the oil price shocks for importers has placed additional pressure on the fiscus of oil importing countries.
In South Africa, economic growth remains unsatisfactory, with reforms underway in sectors with long-standing structural constraints such as the port and railway challenges that until the recent past created bottlenecks and curbed mineral exports. Leveraging the private sector participation and other reforms in the sectors currently underway should mitigate these challenges.
There were additional challenges associated with the geopolitics and in particular the US-South Africa relations which impact on sentiment and future economic growth. Municipal credit risk remains elevated, as municipalities continue to face significant financial distress, with issues such as financial mismanagement, poor audit outcomes, infrastructure vandalism, poor service delivery, and budgetary constraints remaining prevalent.
These challenges call for businesses to re-assess business strategies and evaluate their strategic, operational and financial vulnerabilities. Despite these risks, financial market indicators showed some resilience.
The rand strengthened on the back of a weaker US dollar, government bond yields declined, foreign bond inflows increased, and business confidence improved.
Financial Performance Highlights
Solid Earnings and Continued Profitability
- Net interest income increased by 5.6% to R8.9 billion (31 March 2025: R8.4 billion).
- Operating income increased by 21.7% to R10.6 billion (31 March 2025: R8.8 billion).
- Net profit increased by 47.0% to R7.8 billion (31 March 2025: R5.3 billion).
- Sustainable earnings increased by 44.6% to R7.4 billion (31 March 2025: R5.1 billion).
- ROE on sustainable earnings increased to 12.0% (31 March 2025: 9.3%).
- ROE on net profit increased to 12.7% (31 March 2025: 9.7%).
- Interest expense decreased by 11.2% to R4.5 billion (31 March 2025: R5.1 billion).
Effective Cost Optimisation Strategies
- Cost to income ratio improved to 20.3% (31 March 2025: 22.0%).
Asset Growth and Strong Disbursement Levels
- Total assets increased by 7.8% to R130.5 billion (31 March 2025: R121.9 billion).
- Total gross development loans and development bonds held at amortised cost increased by 5.1% to R120.4 billion (31 March 2025: R115.2 billion).
- Total disbursements (loans and equities) increased by 18.3% to R20.7 billion (31 March 2025: R17.5 billion).
- Equity investments increased by 20.8% to R5.5 billion (31 March 2025: R4.6 billion).
Strong Cash Collections From Development Loan Book
- Cash flow generated from operations increased by 3.0% to R7.0 billion (31 March 2025: R6.8 billion).
- Total loan book repayments decreased by 12.1% to R24.1 billion (31 March 2025: R27.4 billion).
- Total liquidity holdings decreased by 8.8% to R13.7 billion (31 March 2025: R15.0 billion).
Asset Quality – Continued Resilience of Asset Portfolio Under Challenging Operating Environment
- Gross NPL% ratio increased to 3.9% (31 March 2025: 3.2%).
- Net NPL% ratio improved to 1.17% (31 March 2025: 1.2%).
- Impairment losses decreased to R930 million (31 March 2025: R1.5 billion).
- Unrealised fair value adjustments on equity investments amounted to a gain of R832 million (31 March 2025: loss R215 million).
Capital Adequacy and Leverage Ratios Well Within Regulatory Limits
- Debt-to-equity ratio excluding R20 billion callable capital improved to 95% (31 March 2025: 105%).
- Debt-to-equity ratio including R20 billion callable capital improved to 73% (31 March 2025: 78%).
- Capital ratio, as a percentage to unweighted total assets, increased to 50% (31 March 2025: 48%).
- Capital asset ratio, as a percentage to unweighted development loans increased to 64% (31 March 2025: 59%).
- Callable capital is authorised shares but not yet issued. Debt to equity ratio is within the Bank’s regulatory limit of 250%.
Income Statement Commentary
Net profit for the current year increased by 47.0% from R5.3 billion to R7.8 billion. The increase in net profit for the current year stems from an increase in net interest income of 5.6%, increase in operating income of 21.7%, increase in the Bank’s asset base of 7.8% and a 38% reduction in impairment provisions of approximately R570 million. Other interest income for the year increased by 133.2% to R469 million (31 March 2025: R201 million), coupled with positive fair value gains of R1.4 billion (31 March 2025: R31 million) that arose from the Bank’s financial instruments measured at fair value through profit and loss. Return on equity on net profit increased to 12.7% when compared to 9.7% for the prior year due to higher levels of profitability and increased equity base.
The Bank, by virtue of business operations, has a net foreign currency asset position (i.e. total foreign currency asset minus total foreign currency liabilities) amounting to equivalent USD144 million (31 March 2025: USD151 million). Given the ZAR appreciation against the USD and Euro during the current year when compared to the prior year, foreign currency exchange rate loss in the income statement amounted to R78 million (31 March 2025: R55 million loss). Whilst the net foreign currency position is not fully hedged, the Bank closely monitors and manages its exposure to foreign exchange rate risk using natural hedges and derivative hedging strategies. The Bank remains efficient in managing operational costs and the cost optimisation strategy continues to be effective. The total cost-to-income ratio for the current year improved to 20.3% (31 March 2025: 22.0%) and the ratio continues to be well below the limit of 35%.
Balance Sheet Commentary
The Bank’s liquidity and capital position remains strong, despite the challenging operating environment. DBSA continues to raise funding from a diverse pool of funding sources which include debt capital markets, bilateral engagements with commercial banks and international development finance institutions, bond market, money market and private placements. As at 31 March 2026, the 30-day liquidity coverage ratio amounted to 256% (31 March 2025: 1 510%). In 2026, the Bank’s total debt redemptions amounted to approximately R11.3 billion. Liquidity holdings remained within policy parameters with total liquid assets of R13.7 billion as at 31 March 2026, down from R15.0 billion as at 31 March 2025.
Total Assets
The Bank’s total asset base increased by 7.8% from R121.9 billion (31 March 2025) to R130.5 billion as at 31 March 2026. Cash and cash equivalents decreased by 8.8% from R15.0 billion to R13.7 billion, in line with the Bank’s liquidity risk management policy and loan disbursement requirements. The decrease in cash and cash equivalents was offset by an increase in investment securities of R4.4 billion mainly due to the acquisition of government bonds.
Development Results – Delivering Impact in a Challenging Environment
The highlights of development results are summarised in the table below:
Total Infrastructure Development Support
R62.4 billion Total infrastructure development support comprises of:
- Infrastructure value at R6.5 billion delivered
- R20.7 billion loans and equity disbursements
- R17.0 billion in prepared projects approved, and programmes enabled
- R3.5 billion infrastructure unlocked for under-resourced municipalities
- R14.7 billion funds catalysed
Development Outcomes
- 11 867 learners benefitted from 25 newly built schools
- 13 170 learners benefitted from 23 refurbished schools
- 6 854 learners benefitted from 83 improved sanitation facilities through DBE SAFE programme
- 2 305 learners benefitted from improved sanitation facilities through provincial budget allocations
- 586 local SMMEs and contractors employed in the construction of projects
- R5.3 billion value of infrastructure delivered by black-owned entities, of which R4.0 billion was delivered by black women-owned entities
- R510 million benefit accrued to local small, medium, and micro enterprises (SMMEs) and subcontractors employed in the construction projects
- 19 963 temporary and permanent jobs facilitated
- 1 046 youth trained in future skills through the DLabs programme
- 165 start-up enterprises supported through the DLabs programme
Fund Managers Contribution
- 3 800 000 tonnes of food and food-related products delivered
- 110 940 total smallholder farmers and microentrepreneurs impacted
- 15 499 permanent jobs sustained in the different sectors
- 47 545 kilometres of fibre built
Conclusion
Despite the challenging economic environment, a strong leadership and management team has steered the Bank through these challenges, whilst following the principles of good and strong corporate governance.
The Bank has a resilient balance sheet and continues to play a significant role in infrastructure development through lending and non-lending activities. The Bank’s continued success hinges on its ability to increase developmental impact as it seizes the infrastructure moment by using its own balance sheet and partnering with others. Both domestic and global economic factors are critical to the achievement of the Bank’s objectives.
The Bank has a healthy pipeline of projects that forms a solid foundation for future sustainability. The Bank will continue to focus on disbursing for infrastructure projects within its mandate that stimulates economic development.