Despite tough measures imposed on the lending capacity of private banks by the financial sector regulating arm of the government, the National Bank of Ethiopia (NBE), private banks remained profitable in the just concluded Ethiopian Fiscal Year. Fourteen private banks currently operating in the country amassed more than 3.5 billion birr gross profit, Capital learnt.
Dashen Bank took in the most while Ethiopia’s most recent bank; Addis International recorded the least though commendable profit.
Dashen Bank raked in a staggering 896.5 million birr gross profit in the 2011/12 budget year; leaving more than a dozen private banks far behind. Its gross profit nearly doubled the announced 451 million birr net profit recorded in the previous budget year.
Awash International Bank (AIB), which grossed 543 million birr, comes second. Awash and Dashen are the only two private banks that cashed in more than half a million birr gross profit over this past fiscal year. AIB earned about 40 million more profit before tax than in the previous fiscal year, where it recorded 505.5 million birr profit.
Falling behind Awash, Wegagen ranks third. The bank grossed 415 million birr; up nearly 100 million in comparison to its net profit in the 2010/11 fiscal year.
United Bank follows the footsteps of Wegagen trailing by three million birr. It holds the fourth position in the list of top five banks, grossing an impressive 412 million birr gross profit.
Nib international Bank took the fifth position. It cashed in 389.8 million birr gross profit, up from 334 million birr it earned in the 2010/11 budget year.
Another notable bank that lies out of the top five best performers of the year is the Bank of Abyssinia. It generated a gross profit of 313 million birr, up from the 258.4 million birr profit before tax gained in the 2010/11 budget year.
Zemen Bank, a bank operating with a single branch model, continued to strengthen its hold in the financial sector of the country. The bank’s gross profit reached 131 million birr in the just ended budget year, up from the 121 million birr it earned in the 2010/11 fiscal year.
The newest kid in the financial sector of the country, Addis International Bank has earned nine million birr profit before tax in the concluded budget year.
Abay Bank rebounded with a profit in the last budget year from its 2010/11 performance, after having registered a loss of 3.8 million birr. The bank registered a little over 32.1 million birr profit.
The remaining five banks; Cooperative Bank of Oromia, Lion International Bank, Oromia International Bank, Birhan International Bank and Buna International Bank have grossed 142.5, 108, 65.3, 46 and 41 million birr profit before tax, respectively, according to Capital sources.
Nevertheless, the cumulative gain of the 14 private commercial banks remains less than half of what the Ethiopian financial giant; Commercial Bank of Ethiopia (CBE) earned over the same time period. CBE earned a record high gross profit amounting 7.9 billion birr in the 2011/12 budget year. The cumulative gain of the banks which is 3.544 billion birr, represents 45 percent of CBE’s earnings.
NBE introduced a bill that compelled private banks to buy government bonds which consumes 27 percent of the loan disbursement each bank gives out bearing only three percent interest as opposed to the five percent interest they give on deposits. According to reports, the introduction of the directive managed to suck out more than 11.5 billion birr from the private financial sector of the country. The directive was introduced in April 2011 ending the credit cap policy that lasted for two years.
Most of the bank’s Capital talked to refused to confirm the figures on account that the figures needs to first be approved by external auditors before being released to the public.
(Elias Gebreselassie has contributed to this story.)