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The state owned Commercial Bank of Ethiopia targeted to earn 8.8 billion birr profit by the middle of this fiscal year. However, they are far behind that goal because hard currency earnings have been lagging. This is largely due to the recent devaluation of the birr and poor export earnings.
According to data that Capital obtained, 3.67 billion birr was earned during this time and hard currency exchange was 28 percent of that amount.
Sources at the bank told Capital that the recent birr devaluation led to a one hundred million birr loss.
“The LC which was open before October for exporters cost us four birr per dollar because they bought the dollar from us at 23 birr but the devaluation caused the dollar to be sold at 27 birr. The other reason is our bank has not been earning a large amount of money from exports, previously over 60 percent of exports passed through our bank but now it is less than 30 percent,’’ the source said.
Capital tried to reach CBE’s communication officer but to no avail.
“Savings and collections from loans are going well in a majority of our branches which is positive news for the bank and as you know the some of the profit goes to the government for development so if we don’t make a lot of profit it affects development.’’
The source also added that the National Bank of Ethiopia rejected CBE’s plan to allow its customers to use 40 percent of their export earnings to import unrelated items from the export work they do in order to earn dollars.
NBE redirected CBE to follow the old plan that required customers to fully use their export earnings on importing items related to their work in order to receive hard currency.
With the current procedures imported items that are paid for with hard currency and pass through CBE get a commission of 1.5 percent and the National Bank of Ethiopia also obtains the same percentage.
In the last fiscal year CBE earned close to 32 billion birr in revenue. Of which the gross profit before tax is 14.6 billion birr. The bank has collected USD 4.5 billion via remittances export trade and other businesses.