Nib International Bank Share Company (NIB) revealed that it made a net profit of 286.2 million birr in the last Ethiopian Fiscal Year 2011/12 an increase of more than 16 percent from the previous fiscal year 2010/11.
Amerga Kassa, President of NIB, said the profits it gained this year are a result of the successful endeavors it undertook in all its service sectors, but that there is still room for improvement, to maintain its performance and even surpass it.
The Bank said it achieved this all time record profit despite the shortage of foreign exchange, and the impact of the National Bank of Ethiopia’s directive which required private banks to invest 27 percent of their loan disbursement on NBE bills purchase.
Headquarter construction price tag to top 600m Br
Amerga said the much touted planned construction of the Bank and its sister insurance company’s joint headquarter has already surpassed the stage of architectural design, with the inner structure and functionality requirements of the building agreement already made and with consultant engineers looking at this particular work already hired.
The Bank said the plot it acquired was 2800 square meters around the Hayahulet area of Addis Ababa. It also requested to be allotted the adjoining 882.4 square meters plot of land, as the previous place was found to be insufficient for its building project. Following a lengthy discussion with the Addis Ababa city Administration, NIB was recently allocated the additional plot, where it now plans to construct a 33 storey building. NIB stated that it made no design change, but increased the number of storey from the original 20 to 33.
Amerga said there have been a soil tests, and design work, on the new plot, and that the bank expects to start construction within a six month period. The total price is expected to top 600 million birr.
IFC and NIB partnership set to continue
Regarding its cooperation with the International Financial Corporation (IFC), the bank stated that the corporation promised one month back to continue the scheme. IFC is a private arm of World Bank, intended to help the growth of the private sector in developing countries among others.NIB and IFC with the facilitation of TechnoServe had already signed an agreement on October 2011, as part of a third phase of a program for the extension of the risk-sharing arrangement by another 10 million dollars with the aim of helping coffee farmers get loans to fund their projects.
TechnoServe an international non-profit, non-governmental organization, funded by the Bill and Melinda Gates Foundation, has an excellent record of helping farmers in Africa, especially coffee farmers for whom it has facilitated the agreement with its 62 client cooperatives.
The agreement was projected to benefit 45 thousand farmers in 62 cooperatives found in the Southern Regional States and the Oromia Regional State.
Amerga further said the credit system was based on coffee because of the demand and because it is an export item, but there is nothing to stop them from diversifying into other crops like Teff and wheat if they are assisting local or international firms.
He did however say banks operate on shareholders money and as such investing their money has to be prudent, and made with the full confidence of NIB members.
Card banking system to expand
Amerga said NIB’s strategy in the future is that its branch expansion will be professional advice driven, and with the aim of introducing new technologies like the card banking system called PSS. The system has been formed with two other private local banks to reform the cash based society of Ethiopia into a card based system.
In July three banks, Awash International, Nib International, and United Bank, who have more than 1.2 million account holders between them, formed a consortium called Premier Switch Solution S. C. (PSS), aimed at providing shared Automated Teller Machines (ATMs), Point of Sale system (POS), Mobile Banking and e-Commerce services on a 24/7 basis.
The company started its operation by installing 60 ATMs and 300 POS systems in major business districts. It plans to install 40 more ATMs and 300 more POS every year for the coming five years.
The banks had signed a contract with S2M, a Moroccan company that won the bid to create an electronic payment system in November 2011. The system developed by S2M will allow customers of any of the three banks to use their bank credit card to withdraw money from an ATM of any of the Premier Switch members.
It is the first time that banks have realized an integrated card payment system. The system is expected to increase the competitive edge of the banks.
Loan portfolio needs diversification, NPLs well below NBE requirement
NIB admitted that their finance loans depends on the export and import sector and other short term gain oriented fields, and even though the bank is prepared to take a calculated risk, the main way to diversify its loan portfolio is when there is competition among banks.
Additionally Amerga said developing bank capacity and increasing branches will also solve some of the problems related to this in due time.
Regarding Non Performing Loans (NPLs) the bank said it is well below the National Bank of Ethiopia’s threshold of five percent, registering less than 2.5 percent.
Nib International Bank which has already been in existence for more than a decade currently has 37 branches in Addis Ababa, 23 in regional cities, and two foreign exchange bureaus.