Wegagen registers 458.3 mln br profit

Wegagen Bank SC has registered a 458.3 million birr profit before tax in the past fiscal year that is an increment of only about 126 thousand birr in profit than the previous year. The 2011/2012 budget year earning per share has declined by 70 birr when compared with the 2010/11 fiscal year.


When compared with the performances of other banks or Wegagen’s own past performance, the profit margin was low and didn’t show any major growth.
The annual report of the bank indicated that the annual income generated from fees, charges and commissions, net gain from dealing in foreign currencies, income from ATM card payment and others is 363 million birr, which is a decline of 137 million  birr from the 2010/11 fiscal year. A year ago (during the 2010/2011 fiscal year), the bank had earned 500 million birr from the stated income sources.
According to the report, the income that was collected from fees, charges and commissions in the 2011/12 fiscal year (122.7 million birr) has declined by 125.8 million birr compared with the 2010/11 fiscal year (248.5 million birr).
The growth of last year’s profit before taxes is stagnant when compared to the preceding year where the bank’s net profit after taxes and legal reserve had grown by 9.3 million birr. In the recorded year (2011/2012), the bank has earned 333.6 million birr net profit, while a year ago it was 242.4 million birr, but the earning per share in the past fiscal year has shrunk by 70 birr. On the 2010/11 performance the profit earning per share has been 448 birr while in the past fiscal year it has minimized to 378 birr.
According to experts on the sector, Wegagen has to expand its deposit mobilization to increase its performance in this fiscal year. In the last budget year, deposits collected from customers were 5.43 billion birr, which is 305 million birr lower than the preceding year which was 5.73 billion birr.
Bank experts stated that the bank’s total assets in the past fiscal year have not registered significant growth, which is one of the major perspectives to develop the bank’s performance. Last year’s report indicated that the total asset of the bank is 8.347 billion birr, which is 287 million birr higher than the 2010/11 fiscal year performance that was 8.060 billion birr.
On the other hand, the bank capital including reserves has grown to 1.6 billion birr from the previous 1.33 billion birr, while the paid up capital amount has increased to 953 million birr from 779.3 million birr. The loans and advances grew to 3.5 billion birr from 2.8 billion birr.
The experts indicated that the major step the bank has to take is to do business at the level of or in proportion to its capital, which is one of the problems observed in the past fiscal year. He suggested that the bank has to double its deposit mobilization to get significant growth.
On the general assembly that was held on Thursday, November 22nd, the Board of Directors that is chaired by the prominent former TPLF fighter Sebhat Negga, aka Aboy Sebhat, has indicated that deposit mobilization would be one of the alternatives to increase the bank’s performance. The board chairman also stated that the customer handling division and branch office expansions had to expand to increase the bank’s revenues.
On the 19th general assembly and 11th extraordinary meeting the general assembly has agreed to increase the paid up capital to 2 billion birr from the current 1 billion birr.
During the meeting, one point that was on the agenda for discussion was the minutes that was amended by the general assembly a year ago but was not ratified by NBE.
According to the Board of Directors, the National Bank of Ethiopia (NBE), which is the financial institutions’ regulatory body, did not accept last year’s (2010/11) minutes of the general assembly.  On the general assembly that was held in October 2011 the share holders had agreed to disperse 60 percent of the dividend to share holders and to use the remaining balance to increase the capital of the bank. But one of the share holders opposed the decision while three others abstained, therefore, the NBE declined to ratify the bank’s minutes for the year, citing the Country’s commercial code.
During this year’s general assembly (held yesterday, on Nov. 22, 2012) the Board of Directors of the bank proposed that shareholders present their decisions regarding the disbursement of the dividend of the 2010/11 fiscal year in 15 days to the general assembly.

The other issue that was raised was the construction of the bank’s headquarters which was delayed. Wegagen, which is one of the oldest private banks since free market economy was introduced in the Country, signed an agreement with Jiangxin Corporation for International Economic and Technical Cooperation (CJIC), a Chinese construction company, on August 5, 2011 for the construction of the headquarters that is expected to cost 733 million birr. Wegagen’s project, which was expected to be completed in three-and-a-half years, was designed by ETG Designers and consultants PLC and will be located around the Addis Ababa Stadium, in front of Nani Building.
The Board of Directors have indicated that the project was delayed due to several reasons but will commence in the current fiscal year.
Established in 1997 with a 30 million Birr capital by 16 shareholders, the total capital of Wegagen Bank has now reached over one billion birr and the number of its shareholders has increased to 2,137.