Agrobank financial position stable, able to pay govt dividend - AG's report

According to the National Audit Department, depositors' funds used for financing purposes had generated a profit of 55.9 per cent of its total revenue in 2020.

"Its source of funds from government grants had been used accordingly," the department said in the Auditor-General's Report 2020 Series 1 released today.

The report also said that the bank has achieved the mandate it was set up for, which was to finance agricultural development and that it has achieved a KPI (key performance indicators) of between 93 per cent and 98.6 per cent, exceeding the minimum 80 per cent set by MoF Inc.

However, contribution from its mandated financing, recorded in excess of 80 per cent compared with a target of 70 per cent, took into account personal financing, which does not come under the purview of financing for agricultural purposes.

Agrobank's highest financing activity, namely personal financing, Agrocash, does not require applications involving financing agricultural activities.

Financing for the purchase of uncultivated agricultural land also did not contribute to the development of the country's agricultural sector, he said.

"The gross impairment financing ratio shows an increase every year. The low impairment financing rate of Agrocash products has an impact on the overall performance of Agrobank's impairment financing," he said.

Therefore, the Audit Department recommends that Agrobank review and re-evaluate the objectives and purpose of personal financing so that this form of financing can contribute to the progress of the agricultural sector as a whole.