Addis Abeba — Commercial Bank of Ethiopia (CBE) said it has made a remarkable achievement in the 2015 Ethiopian fiscal year, as its exceptional success saw its deposits soar to an astounding 1.1 trillion birr. This groundbreaking milestone accounted for half of all deposits mobilized within the banking industry. Over the course of the fiscal year, a staggering 163.2 billion birr was raised, propelling CBE's resource base with an impressive 18.3% boost.
The state owned bank announced its achievement at a performance evaluation meeting held at CBE's new headquarters, with the board of directors and bank management in attendance. During the meeting, Abe Sano, the president of the bank, expressed some dissatisfaction with the deposit mobilization during the period compared to the set target. "However, given the intense competition within the banking industry, the performance can be considered relatively better," he said.
During the fiscal year, the 80-year-old bank aimed to mobilize approximately 205 billion birr, falling short by 41.8 billion birr. Abe revealed that the bank has ambitious plans to mobilize a deposit of 214 billion birr during the 2016 Ethiopian fiscal year, which will propel its total deposit base to a staggering 1.3 trillion birr.
On the other hand, CBE disbursed 89% of the planned 169 billion birr as credit. The bank's capital also soared to 63.1 billion birr, representing 27.7% of the total capital registered by the banking industry. Additionally, its total assets reached 1.3 trillion birr.
In recent years, the growth of private banks and the emergence of new players in the industry have posed challenges to deposit mobilization. The number of banks operating in the country has nearly doubled in the past two years, with Sidama Bank becoming the 31st bank to open its doors to customers just a month ago. Financial firms such as Amhara and Oromia saving and credit institutions, previously functioning as microfinance institutions, have also upgraded to full-fledged banks. As new entrants flood the industry, competition has intensified, prompting financial institutions to vie for customers by offering attractive savings rates and product packages.
Recognizing the need for global competitiveness, the Ethiopian government has taken steps to open up the country's financial sector, which has traditionally been isolated from global money markets. The National Bank of Ethiopia (NBE) recently revealed its plans to issue banking licenses to foreign investors, with intentions to grant up to five licenses within the next five years. However, currently, the state-owned CBE maintains the largest market share in the industry.
Under the leadership of Abe Sano, CBE launched the digital application Fuel Up and the EthiopiaDirect money transfer service during the fiscal year (Photo: CBE/Facebook)
In the reported period, the bank's gross profit reached 20.6 billion birr. Despite a slight decrease of 4.7% compared to the previous year, this profit surpasses the combined gross profits of the three leading private banks in the previous fiscal year. Awash, Dashen, and Abyssinai banks recorded a combined gross profit of nearly 19 billion birr in 2021/22.
Foreign currency earnings is another area in which the state-owned financial giant excelled, generating $3.5 billion throughout the fiscal year. Emebet Melese, vice president of strategic planning and transformation at CBE, highlighted that this achievement surpassed the set target by 107% and represented a 32.1% increase from the previous year.
CBE is one of the top public institutions that generate hard currency for the country, which has been grappling with the scarcity of foreign currency. Ethiopia has been experiencing foreign exchange shortages for a long time, and the issue has worsened recently. Instability and conflict observed in different corners of the country have obstructed foreign currency inflows by limiting tourism and foreign direct investment. The severe shortage of foreign exchange has become a critical issue for importers across various sectors such as manufacturing, agriculture, and construction, which have been particularly hard-hit by this crisis.
This is evidenced by CBE's foreign currency allocation during the fiscal year. The majority of the foreign currency generated by the bank was allocated to fuel and fertilizer imports (57%), with only 7% being provided to the business community and 18% for public imports and service payments.
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Recently, CBE has made significant strides in expanding its digital financial services. In January 2023, the bank introduced the EthioDirect money transfer service, specifically catering to members of the Ethiopian diaspora residing in seven countries, including Canada, Israel, and the United States. This service enables users to send money ranging from $5 to $1000 directly to Ethiopia.
Another development came in April 2023, when CBE collaborated with the Ministry of Transport and Logistics and National Oil Ethiopia to introduce a digital application called "Fuel Up." This application facilitates the payment of fuel transactions, making the process more convenient for customers. Additionally, the bank updated the CBE Birr payment system to include a fuel payment feature, enhancing its versatility. AS
