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Ethiopia: With Declining NPLs, CBE's 2Q Profit Gallops Up
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Addis Fortune (Addis Ababa)
11 March 2008
Posted to the web 11 March 2008
Tamrat G. Giorgis
The state-owned giant Commercial Bank of Ethiopia (CBE) has reported a stunning performance from its second quarter operations, where it has made a record high profit.
The Bank has registered un-audited 716 million Br in gross profit from its operations in the first two quarters of the fiscal year, up by 74 million Br from a similar period last year, according to a press statement issued on Friday, March 7.
This is a remarkable achievement to a management board installed one-and-a-half years ago, under the leadership of Abie Sano, the youngest top executive CBE has seen in its 66-year history. Not only has the Bank managed to expand its capital base from 173 to 470 million dollars in July 2007, the size of non-performing loans (NPL) has remarkably declined to an all-time low of 13-15pc from over 50pc four years ago. It aims to further reduce NPLs to single digits, disclosed the Bank.
CBE owes its current performance to growth in credit advances, as opposed to external trade it has been known for.
"The credit services contributed the highest share of income when compared to the contribution of other services of the Bank," according to the statement CBE issued.
CBE always enjoys a dominant position in the finance sector: Although the private banks are claming an increasing share of the market, CBE holds close to 40pc of capital; while its assets are estimated to be worth more than three billion dollars, over 60pc larger than all the other banks combined. This worries analysts that Ethiopia's banking industry is exposed to risk concentration.
Its deposit mobilisation from close to two million account holders at its 197 branches gives it the lion's share in the market, claiming a little over 65pc of total deposits in the country.
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It is no less dominant in loans and advances where it controls close to 36pc of the market. Its single borrower limit of one billion Birr is almost half the size of the total deposit a private bank could mobilise.
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