Key Takeaways:
The state-owned Commercial Bank of Ethiopia (CBE) has engineered an impressive recovery that executives credit to new strategies and policy shifts. The Bank reported collecting 367.40 billion Br in fresh deposits over the past eight months, a 344.4pc jump from the same period last year, bringing total deposits to 1.51 trillion Br.
CBE's President, Abie Sano, appeared last week before Parliament, where he presented an eight-month performance report to the standing committee for State Enterprises Affairs. Lawmakers seemed surprised by the deposit jump, particularly given that last year’s figures reached only 63.2pc of the plan and fell 28.6pc compared to the previous period.
However, Abie attributed the surge to savings from branch closures, account restructuring, digital enhancements, and expanded lending. He praised the role of online platforms in attracting new customers, disclosing CBE's determination to increase the adoption of mobile and internet banking across the country. CBE closed 18 branches that were found unprofitable, lowering its branch count to 2,002.
“We made major changes curbing our expenses,” Abie said, noting that expenses rose by only 2.6pc year-on-year, to 76.6 billion Br.
Net income reached 109.32 billion Br, a 26pc increase, while gross profit hit 32.6 billion Br, up 170.5pc, which Abie called a sign of efficient cost control. Total assets reached 2.03 trillion Br, a 38.3pc rise from a year earlier, while the capital base rose 105.3pc, to 109.32 billion Br.
Despite the improved performance, Abie conceded that CBE still wrestles with an asset-liability imbalance. He revealed that a macroeconomic reform launched in early August last year cost the Bank 30 billion Br in foreign-currency losses. He also pointed to a new financial reform on the horizon. The World Bank recently approved nearly 700 million dollars under a financial-strengthening initiative for the Bank.
Treasury Director Yonas Lideta disclosed that the 650 million dollars of the designated amount remains undistributed until CBE meets the National Bank of Ethiopia (NBE) regulations. He said these funds would be crucial for recapitalisation, partly offsetting the loss from forex change. The President expects as much as 450 million dollars in disbursements by the end of April.
The National Bank of Ethiopia (NBE) introduced directives to firm up corporate governance and risk management, including rules on board composition and related-party transactions.
“We're complying with the regulations,” Yonas told Fortune.
Much of its capital comes from government-issued promissory bonds, which have not yet been fully redeemed in cash. Yonas said the government recently paid 38 billion Br in interest on the total 846 billion Br in public debt. The President urged officials to accelerate cash payments.
“We need those bonds to be paid in cash as much as possible,” he said.
CBE plans to modernise its governance, adopt prudent lending, and fully comply with central bank oversight.
Financial consultant Worku Lemma lauded the consolidation, saying that opening physical branches no longer guarantees profitability in a digital era.
However, some members of Parliament expressed concern that focusing on profitability could leave parts of the country without adequate financial services.
According to Abraham Alemayehu, an MP representing a constituency in Maji Zone of Southwestern Ethiopia Regional State, the area has no bank, although it has seen gold production expanded. With growing mining activities, he argued that these localities are prime markets for basic financial infrastructure.
CBE collected 149.2 billion Br in loans, mostly from private borrowers at 72pc. It disbursed 264 billion Br in loans, 88pc of which went to private clients. According to Abie, the Bank had long financed public entities at an eight percent interest rate, making up 92pc of its loan portfolio.
“We made many changes in our financing strategies, improving the Bank’s financial performance,” he told Fortune.
The Bank’s outstanding loans, advances, and bonds amount to 1.393 trillion Br, up 23.3pc year-on-year, with bonds accounting for 65pc. Recently, the federal government authorised issuing 900 billion Br in delayed bonds to shore up the Bank’s position and address non-performing loans. Of this sum, 845.3 billion Br will pay off state-owned enterprises’ debts, and 54.7 billion Br will boost CBE’s capital.
Abie told legislators the injection prevented a potential risk.
“We were in a lot of burdens, even though it didn’t look like it,” he said. "The macroeconomic policy reform has done the Bank a lot of good.”
Industry analysts observed that CBE's heavy exposure to the Liability & Asset Management Company and Ethiopia Electric Power had placed it at considerable risk.
Although CBE has rebounded, the President noted a deposit-concentration vulnerability, warning that a withdrawal by a handful of large depositors could pose a serious liquidity threat. The Central Bank’s recent stress test found that if the top 10 depositors at each Bank withdrew simultaneously, 20 of 29 lenders would fall below minimum liquidity requirements. Observers say that CBE’s dominant role — it holds roughly half the industry's total assets and deposits — means systemic risk looms if major depositors pull out.
To cope with rising deposit-mobilisation costs, CBE raised loan interest rates, which executives say aligns with market conditions and helps the Bank remain competitive. Export-related loans, such as pre-shipment credit, climbed four percentage points to 12pc, while personal loan rates for employees of large foreign-currency-generating companies rose to 13pc.
Yet, exporters have felt the sting. The Oromia Coffee Farmers’ Cooperative Union, representing over half a million farmers, had borrowed 200 million Br at eight percent before learning the rate would jump.
“It was an unexpected adjustment,” said Dejene Dadi, the Union's representative, who plans to seek another 400 million Br were scrapped. “We're trying to find a way out.”
MP Abraham argued that CBE appears to be shifting from a state-owned service provider to a profit-driven institution, at odds with its historic purpose.
“There is a fear that it is turning away from its main role,” he said.
Abie countered that the Bank has only recently become profitable and that policy changes were vital to its resurgence. Still, some lawmakers criticised a shortfall in credit availability in towns like Dessie in the Amhara Regional State. Abie acknowledged that only 924 million Br had been disbursed there, below the 1.4 billion Br goal, blaming administrative constraints.
“The issue will be resolved soon,” he pledged.
Industry observers say that balancing deposit growth with careful loan management remains a persistent issue for the CBE. Worku, the financial consultant, described CBE as a policy bank established to serve the public and stabilise the economy.
“The Bank shouldn’t forget its purpose,” he said.
He cited a surge in CBE’s deposits, possibly from depositors migrating from private banks, and noted CBE also benefits from government deposits in interest-free accounts.
“This shift will not be profitable to private commercial banks already struggling to stay liquid,” he said. “The CBE can never turn away from financing public projects. It just has to be smart about it.”
PUBLISHED ON
Apr 06,2025 [ VOL
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