Abay Bank Share Company, one of the new entrants in the Ethiopian financial market
posted a net profit of 2.35 million birr in the first three months of the 2011/12 Ethiopian fiscal year which is July 8 to October 11; a notable recovery from the bank’s previous year’s performance, when it registered a loss of 3.8 million birr.
Dr. Molla Mengistu Manager of Business Development at Abay Bank said the bank in the first three months of the 2011/12 fiscal year generated a total revenue of 14 million birr while its expenses stood at 11 .4 million birr. Abay Bank’s total assets grew to nearly 577 million birr, its total deposit to 356 million birr while the paid up capital of the bank reached about 177 million birr.
The bank has also expanded its branches during the three-month period eventually increasing it by eight to reach 17 with an 18th branch set to be opened this week in the border town of Metema known for its sesame trade.
The bank in the previous 2010/11 fiscal year had generated a total revenue of 12.3 million birr and incurred 16.1 million birr expense, while the total deposit was 263.3 million birr, the paid up capital stood at about 158 million birr and the total assets of the bank were at about 457 million birr through the bank’s nine new branches located in four regional states.
Molla also said the bank had rather expected to still incur loss at the quarterly year review because of its novelty to the banking sector and the high costs it incurred in office rent and equipments and supply purchases to start operations but instead made a profit.
Molla further explained that the bank which officially started operations on November 4, 2010 had only properly functioned for four months when it made a net loss of 3.8 million birr. He considered the first couple of months as start up period where the bank had to overcome challenges to set up and start working.
The 2010/11 report relates to the bank’s eight month operations since it started in November (November 4, 2010 to July 8, 2011).
Abay bank had earlier received a license from the National Bank of Ethiopia (NBE) on July 14, 2010 to formally start operations.
However Mesenbet Shenkut President of Abay Bank said the bank is incurring problems with rising office rent costs and in order to solve that it has applied for plots in cities like Addis Ababa, Bahir Dar, Gondar and Dessie to construct its own buildings.
She also said the bank is finalizing arrangements to enter agreements with international Money transfer Agents such as Western Union, MoneyGram, and Express.
The bank is using a banking technology called Flexcube which was designed by a US based firm Oracle Financial Services.