18 November 2012

Ethiopia: Investing in Financial Sector Smart Move

Despite doomsday projections subsequent to government's decision, in May 2010, for private banks to spend 27pc of their loans and advances in buying mandatory bonds, the financial sector is proved to be an industry worth investing hard earned savings.

It is highly regulated, and safe for members of the public to buy share from - its latest financial disclosures reveal shareholders are rewarded awesomely from Dashen Bank's highest dividends on share of 92.6pc to United Bank's 52.8pc. No other industry in the economy is seen rewarding shareholders in such returns. Even insurance firms, with little capitalization compared to their sisters in the banking industry, are galloping. Nib Insurance Company has paid 22.2pc dividends on shares, after recording 35.2 Million Br in net profit from its operations of 2011/12.

Nonetheless, industry leaders such as Brehanu Getaneh of United Bank, who is also president of the industry lobby group, and Brehanu Woldesellasie of Dashen Bank, have a lot to debate to agree whether it is time to compensate shareholders with fat returns or recapitalize for rainy days.

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