The Bank of Abyssinia (BoA) amassed 1.34 billion Br in net profit from its last year operation, registering an impressive 57pc growth and cementing its position as one of the largest private banks in the industry. The growth is markedly on the 10pc it recorded the previous year when it netted 853.7 million Br.

The Bank managed to move forward at a higher growth trajectory while laying a strong foundation for its future drives, Mekonnen Manyazewal, board chairperson of the Bank, told shareholders who met at the Sheraton Hotel on December 18, 2021.

Mekonnen was a technocrat who had previously served as head of the National Planning Commission, a state minister for Finance & Economic Development, and minister of Industry. He also had responsibilities as a board member at various state-owned enterprises, including the state-owned Commercial Bank of Ethiopia (CBE).

The robust profit growth allowed the Bank of Abyssinia to pay 36pc more in dividends to its 2,400 shareholders. Its earnings per share (EPS), increased to 9.78 Br, has shown a turnaround from a dip to 7.23 Br in 2019/20. Unlike other financial institutions, shares at BoA have a par value of 25 Br.

One of the beneficiaries of the turnaround in returns is Tsadik Habtamu, who inherited part of 1.4 million Br worth of shares from his father along with his two older sisters.

“I didn’t expect bank shares to be worth this much,” said Tsadik.

He owns a little more than 18,600 shares worth close to half a million Br.

Abyssinia`s growth in profit was brought by a surge in revenues from interest-bearing activities. The Bank`s interest on loans, advances and central bank bills soared by 62pc to 7.86 billion Br. The jump was driven by increased lending. Unusual to the banking industry, Abyssinia`s disbursement of loans and advances more than doubled to 75.5 billion Br by the end of the last fiscal year.

Its executives demonstrated prudence in their lending policy. Credit growth was backed by deposits mobilised, reaching 89 billion Br, an 86.6pc increase. However, the loan-to-deposit ratio at Abyssinia Bank grew close to 89pc from 77pc a year ago but shied away from reaching the 90pc ceiling taken as an industry standard.

Pushing the ratio to the limit may bring more interest income, but it is very concerning as it can cause liquidity issues, cautions Abdulmenan Mohammed, a financial statement analyst based in London.

Along with the deposits, the Bank managed to recover almost all of the credit it had disbursed in previous years, according to Dessalegn Yizengaw, vice president for financial management.

“The combination of these factors allowed the Bank to more than double its credit disbursement,” he said.