The banking sector in Ethiopia has registered profit sustainably in the past consecutive years showcasing that the nation’s economy is on the right track. The last budget year’s profit, more than 78 billion Birr, that all banks, public and private, secured testifies the reality.
According to the crud report released from the National Bank of Ethiopia (NBE), the financial sector working in the country irrespective of the new financial institutions, the two public banks and all other private banks registered 78 billion Birr profit before tax and other deductions. The report further indicates that 26 private banks registered profit more than 52 billion Birr before tax.
Likewise, the two public banks, Commercial Bank of Ethiopia (CBE) and Development Bank of Ethiopia (DBE) profited totally 26.5 billion Birr— 20.06 billion and 6.4 billion respectively. In the 2022/23 budget year, out of all banks, though the Commercial Bank of Ethiopia profited high amount, its profit shows a six billion Birr reduction as compared to the previous budget year.
On the other hand, the Development Bank of Ethiopia has become one of the best performer Banks in the industry. Three years ago, out of the total DBE’s loaned money, 43 percent was spoiled but through energetic reform work in the last three years, it is managed to lift it out of bankruptcy and it is enabled to register the aforementioned amount of money.
During the budget year under discussion, it became one of the best profit makers in the country’s banking system gaining a 6.4- billion Birr before tax and other deductions. As compared to the previous year, its profit surpassed last year’s by 2.8 billion Birr. Its spoiled loan also was reduced to 11 percent and its loan grant amount has also grown year by year.
According to the information obtained from the DBE, in the budget year, it allocated 46 billion Birr for loan exceeding the previous year by more than half which was only 22 billion Birr. With regard to the private banks’ loan, the Awash bank has registered the largest amount of profit in the budget year.
The bank profited 11.35 billion Birr before tax and other deductions. Out of all the private banks, Awash bank is the only bank enhanced its profit by registering more than 10 billion Birr. Next to Awash bank, among the private banks Dashen and Abysinia are the best performers and registered high amount of profit.
In the just ended budget year, Dashen Bank registered 6.3 billion Birr profit before tax and other deduction while Abisynia bank profited 6.09 billion Birr. In addition to the aforementioned three private banks, other seven private banks registered from 2.02 billion to 4.6 billion Birr profit during the same period, according to sources. Oromia Cooperatives Bank, Hibret Bank, Zemen Bank, Oromia Bank, Nib Bank and Buna Bank are categorized under this group.
In the last two to three years, Anbassa and Wogagen banks faced critical crises because of the war broke out in the northern part of Ethiopia, but after the end of the war through rigorous efforts, they could manage the crises, enhanced their performance and increased the amount of their profit. Anbessa Bank, for instance, made a profit of 1.1 billion Birr, while Wogagen Bank 1.3 billion Birr before tax and other deductions in the last budget year.
Enat Bank, out of the private Banks, highly increased its profit rate as compared to the previous year. It could make more than one billion Birr profit before tax and other deductions in the ended budget year for the first time since its inception. In addition to the profit, according to the banking industry last budget year’s performance figurative report, the Banks’ total wealth and capital has grown to 2.8 trillion Birr.
Out of the total wealth, the Commercial Bank of Ethiopia owned the largest portion and in the just ended budget year, its wealth amount rose to 1.3 trillion Birr and the remaining banks all together owned the balance 1.5 trillion Birr. Among the private banks, four Banks raised their capital amount to more than 100 billion Birr and Awash Bank is the vanguard one. In the 2022/23 budget year, the Awash Bank total wealth rose to 239.7 billion Birr and this makes the Bank the first in terms of volume of the capital amount.
Next to Awash bank, three private banks are mentioned with higher capital amount and accordingly, Abysynia has registered the capital amount of 189.8 billion Birr, Dashin Bank, 145 billion Birr and the Oromia Cooperatives Association Bank 139.5 billion Birr.
In the Just ended budget year, banks such as Hibret, Nib, Oromia, Abbay, Tsedey and Wogagen each registered more than 50 billion Birr capital. According to the report of National Bank of Ethiopia, total wealth of the banks in 2021/22 budget year was of 2.49 trillion Birr. During the last five consecutive years, the banks’ wealth grew on average by 2.4 percent annually.
In the year 2019/20 the Banks’ capital amount was 1.5 trillion Birr and in the 2020/21 fiscal year, it was 1.96 trillion Birr. According to the report, the Banks’ paid up capital amount rose to the highest level to 224 billion Birr in the end of the 2022/23 budget year. The capital amount surpassed the previous year’s by 24 billion Birr. Among the private Banks, three Banks namely Awash, Abysinya, and Oromia Cooperative Association have more than 10 billion Birr paid capital. The Awash Bank paid capital in the last budget year rose to 14.6 billion Birr, the Abysinia Bank 11.8 billion Birr and the Oromia Cooperative Association Bank rose to 10 billion Birr.
The Commercial Bank of Ethiopia raised its paid up capital amount to 63.1 billion Birr and the Development Bank of Ethiopia paid up capital amount also rose to 38 billion Birr. According to the information obtained from the National Bank of Ethiopia, the two public owned Banks registered high amount of capital in the nation’s banking industry in which the nation had ever experienced.
With regard to the deposit money collection, all Banks working in the country have registered 2.2 trillion Birr deposit. In line with this, the private banks could collect more than 1.1 trillion Birr deposit and the rest is owned by the Commercial Bank of Ethiopia. The Commercial Bank of Ethiopia, for the first time, could raise its capital amount to more than one trillion Birr in the just ended 2022/23 budget year.
The National Bank of Ethiopia report indicated that, the amount of the Banks loaned money including nonprofit loan in the end of 2022/23 budget year raised to 1.1 trillion Birr. Recently, the Commercial Bank of Ethiopia announced that the amount of its loaned money rose to more than one trillion Birr. Currently, the banks have more than 125 million customers who deposited their money including those owned more than one bank account. This number has dramatically increased in the last four years from 52 Million in 2019/20.
Ethiopia is the second most populous country in Africa next to Nigeria with more than 130 million. Its mainstay of the economy is agriculture characterized by subsistence and vulnerable to drought but with abundant untapped natural resources. Due to the absence of sufficient capital, technology and human resource, however, the nation is still found itself in abject poverty.
The ongoing development of both the public and private banks can play pivotal role in tapping the natural resources by providing loan as initial capital to the unemployed youth. So far, the Development Bank of Ethiopia engaged in such endeavor and enabled thousands to obtain jobs and the other banks should follow the footsteps of the DBE and play their part in poverty reduction.
BY ABEBE WOLDEGIORGIS
THE ETHIOPIAN HERALD TUESDAY 22 AUGUST 2023
