Nib International Bank (NIB) reported a profit after tax of 283.23 million Br for the 2011/12 fiscal year, up by 16.4pc from that of the previous year, although its earnings per share have gone down from 188 Br to 172Br.
This was announced at the 13th shareholders general assembly and extraordinary meeting held at the Millennium Hall, on Saturday October 27, 2012.
The bank’s paid-up capital has also gone up to 943.8 million Br, way above the 500 million Br minimum requirement set by the National Bank of Ethiopia (NBE) in September 2011.
“Although we do not have to increase paid up capital, the decision to do so was taken by shareholders who want a stronger bank,” Amerga Kassa, president of the bank told Fortune.
In 2011/12 alone, NIB had raised 226.8 million Br additional paid-up capital, which led to a 9.5pc decline of Earnings per Share (EPS).
“A huge paid-up capital increase unmatched by a similar increase in profit has repeatedly undermined the EPS of NIB,” observes Abdulmena Mohammed Hamza, accounts manager atLondonbased Portobello group.
The management of the bank should analyze the profit dilutive potential of fresh capital, he added, and try to balance it with profit increase. Capital increase, he said, also needs to be matched by an increase in loans, or it will be a cost to the bank.
The bank has a plan to increase its loan disbursements annually, according to Amerga. The total outstanding loan of the bank has reached 3.7 billion Br, which has shown an increase of 34.1pc compared with the previous year.
Tafesse Bogale, (centre) chairman of the board of directors of BIB discussing with his deputy Tesfaye Hailemariam, (right) at the assembly, while Amerga Kassa, (left) president of BIB listens attentively.
Out of the loans disbursed last fiscal year, the manufacturing sector took the largest share of 23pc, followed by the building and construction sector which absorbed 18.5pc.
The five year NBE bill that NIB purchased for 2011/12 has also increased by 648 million Br in 2011/12, jumping to 1.211 billionBr.All private banks operating in the country have to purchase three per cent interest bearing bonds amounting to 27pc of each loan they advance, according to the central bank directive issued last week.
The investment in the NBE bill represents 14.63pc of the total assets and 20.75pc of the total deposits of the bank.
Various liquidity ratios indicate that NIB’s liquidity has dropped. The cash and bank balances proportion to total assets has declined to 33pc from 48.4pc and its proportion to total liabilities has plunged to 39.2pc from 56.2pc.
If the amount continues at this level, NIB may face difficult times ahead, according to Abdulmena. NIB should focus on medium and long term loans to reduce the amount of funds that go to NBE bonds, he advises the bank.
“The government has introduced the NBE bill in order to finance long term projects that have benefits for the country, and we will support its policy” Amerga said.
The bank had collected 680.7 million Br in deposits last fiscal year, improving by 13.2pc from the 2010/11. The bank has opened six branches during the year, according to its annual report, in response to stiff competition among banks for deposits. Its loan to deposit ratio has also jumped from 51.43 pc to 61.8pc.
From the non interest earning activities, foreign currency dealings have dropped by 24.5pc, even worse than the performance in 2009/10, the year before devaluation and the windfall revenue that ensued.
But Amerga says thatEthiopiabeing a net importer, the decline is more of a national problem.
Indebtedness is an issue that has strong affinity with the ruling Revol...
With the global price of oil declining, local stations across Ethiopia...
Norway has had a new emissary, Andreas Gaarder, for...
Infrastructure expansion could be sustained only through inclusive grow...
The government’s Growth & Transformation Plan (GTP) is targeted a...
Divergence will be a major global economic theme in the coming year, in...
Words are a key means of communication. They are one of the most import...