New branches mean more profits for BoA

Mulugeta Asmare, President of BoA
Mulugeta Asmare, President of BoA

During its annual meeting, Bank of Abyssinia (BoA) announced that it would attempt to increase its private capital to four billion birr this year.

Established in 1996, Ethiopia’s second oldest private bank has been rapidly expanding, opening 53 branches in 2015/16, while developing new partnerships in the financial industry.

As of the end of this fiscal year the bank’s paid up capital was 1.27 billion birr. It has told shareholders of plans to multiply that amount three fold. This is significant, as currently the maximum paid up capital in Ethiopia’s private bank industry is about 2.3 billion birr.

According to the annual report that Capital obtained the bank has been making inroads in all subsets of the financial business.

As of June 30, 2016, the end of the fiscal year, BoA amassed 1.6 billion birr in total income a 35 percent growth compared with the preceding year.

Profits went up 487.2 million birr before tax, up significantly from the 2014/15 fiscal year.

Gross profits went up by 30 percent, an additional 113 million birr in revenue.

The net profit after tax was 375 million birr up from 288 million birr a year ago. Paid up capital went up to 31 birr per 100 birr share, up from 27 birr a year ago. Deposit mobilization grew by 22.6 percent. BoA mobilized 13.6 billion birr up 2.5 billion birr.

There were 585,735 deposit account holders which is an increase of 107,299 or 22.4 percent, according Mulugeta Asmare, President of BoA.

During the review period, the share of savings, demand and time deposits from the amount of total outstanding deposits stood at 68.6, 24.9 and 6.4 percent, respectively.

The total outstanding loans and advances to businesses stood at 8.0 billion birr an increase of 2.1 billion birr or 35.6 percent.

One reason deposits went up is because the bank has added more branches across the country.

According to the bank’s report, the new strategic plan and organizational configuration, which is still in the early stages helped them to increase their branch networks to 185 adding 53 new branches and sub-branches during 2015/16 alone.

In the international banking sector the bank mobilized 7.3 billion birr in foreign currency, an increase of 46 percent. The bank now has 16.8 billion birr in total assets and 2.1 billion birr in total capital.

Recently, BoA began working with Deloitte Consulting Plc  to develop a strategic business plan. Two weeks ago it inaugurated Habesha Branch at Bole Road, which will provide services relevant to corporate customers.

Soon it plans to open similar branches in Bole Medhanealem and Legar. The Legar corporate branch will be located in the bank’s new headquarters which will be open this coming year.

“BoA has made it easier to get service by installing 82 ATMs and placing 138 PoS machines at merchant sites. As a result, we now have 58,359 card and 41,797 mobile banking users,” Mulugeta said during his annual report released to shareholders.

The bank hopes to engage more customers as currently 20 percent of people use 80 percent of their business. Their Habesha Branch prototype, which focuses on premium customers, is one example of this new strategy.