Awash Bank, the first private bank in Ethiopia, maintains its top position in the industry, registering a 35pc rise in net profits to one billion Birr. Its earnings per share (EPS) have also increased from 371 Br to 409 Br, the highest amongst all banks.
This is a comeback for the 24-year old Bank that had registered its lowest shareholders’ return in a decade in the 2015/16 budget year. The Bank was able to pay a high EPS despite an increase in its paid-up capital by 18pc to 2.6 billion Br.
“The management should be appreciated for this,” said Abdulmenan Mohammed, a financial analyst with 15 years of experience in Uk and Ethiopia.
Tsehay Shiferaw, president of Awash Bank, in his message to the shareholders, also acclaimed its performance in the past fiscal year.
“In spite of the ups and downs, the Bank’s performance was extraordinary by all standards,” he said.
Awash’s profit level is also far ahead of its peer, Dashen.
The latter’s net profit grew by four percent to 756.1 million Br, the second highest in the banking industry in the preceding budget year, whereas its EPS dropped by 70 Br to 392 Br although higher than the industry average. The decline was a result of a 29pc increase in paid-up capital to almost two billion Birr.
The gap in profits of the two banks, which stood at 16 million Br in 2015/16, skyrocketed to 246 million, in favour of Awash in the concluded budget year.
Awash’s growth in profits after tax has been attributed to a massive increase in interest, service charge and commissions, and other incomes.
The Bank’s interest on loans, advances, bonds and other deposits has surged by 35pc to 2.6 billion Br.
Particularly, the revenues from non-interest activities have shown a considerable rise as well.
Service charges and commissions have soared by 44pc to 643.47 million Br, while gains on foreign exchange dealings have increased by 18pc to 268.08 million Br despite facing acute forex shortage.
Awash’s revenues from forex were moderate compared to its competitors.
Dashen’s gains on foreign exchange dealings slumped by seven percent to 266.5 million Br, while Wegagen posted twice this amount.
The increase in income resulted from enormous investment.
Awash has spent a total of 2.4 billion Br, an increase of 31pc; interest expenses have soared by 17pc to 914.18 million Br, salaries and benefits have gone up by 38pc to 848.1 million Br and general administration expenses by 32pc to 557.44 million Br.
Provision for doubtful debts has soared by 408pc to 94.03 million Br. Yet, this is lower than its peer, Dashen, whose doubtful debts surged by three and a half folds to 131.6 million Br.
“As the amount is high, Awash’s management should look carefully into it and take appropriate action,” said Abdulmenan.
But, for Andualem Hailu, director of Communications and Marketing at Awash, such growth in doubtful debt is inevitable.
“Considering the registered growth in loans, doubtful debt is not at a worrying level,” he says. “Additionally, our nonperforming loans are below two percent, showing that we are in a healthy state.”
The total loans and advances of Awash have gone up by 46pc to 22.5 billion Br. Awash mobilised deposits of 32.8 billion Br, an increase of 35pc. The loan to deposit ratio has increased from 67pc to 68.8pc, one of the highest in the banking industry.
“Such level of loan to deposit ratio is remarkable,” said Abdulmenan.
Moreover, Awash’s total assets have increased by 35pc to 42 billion Br, the biggest amongst all private banks.
Source : AddisFortune