25 November 2012

Ethiopia: Abyssinia Bank Earns Nearly a Quarter of a Billion in Profit

The Bank of Abyssinia (BoA) reported finishing the 2011/12 fiscal year with a profit after tax of 215.17 million Br, 22.9pc higher than that of the previous fiscal year.

The 16th annual shareholders' meeting which took place at the Hilton on November 10, 2012, also heard that the Earnings per Share (EPS) was, nonetheless, down from 14.16 Br to 13.59 Br, because of additional shares that were sold to raise the company's paid up capital. It had sold a little more than 6.5 million shares each with a par value of 25Br.

The achievement was made despite local and international financial crises, Mahari Alemayehu, board chairman of the Bank, told shareholders.

BoA secured a total income of 723 million Br showing, up by 105 million Br from that of the earlier year.

"I am proud of the Bank's performance and its determination to sustain the paid-up capital," said Wubishet Workalemahu, general manager of Anbessa Advertising and founding shareholder of the Bank told Fortune.

Total deposit at the Bank grew by 696 million Br to 6.7 billion Br while its interest leaped by 33.7pc to 497.49 million Br. Non-interest income such as commissions and service charges increased by 25.6pc to 112 million Br in 2011/12.

BoA has a Capital Adequacy Ratio (CAR) of 19.6pc and paid-up capital of 478.9 millionBr.This figure is more than twice the legal requirement of eight per cent demanded by the National Bank of Ethiopia (NBE).

However, these improvements have been undermined by 33.7 pc decline of income from foreign exchange dealings to 85.4 millionBr.

"The fall of coffee price in the international market has the major roll for the decline of foreign exchange dealings," Addisu Habba, president of the Bank told Fortune.

The impact of the volatile export condition has been exacerbated by an intense competition among banks, comments Abdulmena Mohammed Hamza, accounts manager at the London-based Portobello group.

"The management of BoA should scan these emerging trends and devise appropriate strategy to protect its market," he suggested.

BoA's total expense is 20.4pc higher than last year and stood at 435 millionBr.The bank incurred interest expense of 208.5 million Br, an increase of 27.3pc, and staff and general administration expense of 202.9 million Br, which increased by 13.3pc.

The bank has increased its total assets size by 13.2pc to 8.24 billionBr.While the loans and advances have gone up by 18.5pc to 3.8 billion Br, the central bank bonds it buys by an amount equaling 27pc of each loan it extends has grown by 79pc to 1.5 billion Br. This investment, accounting for 17.7pc of the total assets and 21.6pc of the total deposits of the Bank, earns three per cent interest.

The liquidity level of the Bank declined in absolute and relative terms. Cash and bank balances went down by 12.9pc to 2.523 billion. Liquid assets to total assets ratio has decreased to 30.6pc from 39.8pc, and liquid assets to total deposits ratio has declined to 37.3pc from 47.8pc.

The Bank improved its loan to deposit ratio to 56.1pc from 52.8pc, which has been enhanced by the 340,000 customers it has on hand.

The Bank is currently finalizing the installation of a CORE banking solution, which will become operation during the current fiscal year, Addisu said. The Bank currently has 63 branches, 33 of which are in Addis Abeba.

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