Bank of Abyssinia, one of the three most profitable banks in the country, registered moderate growth during the past fiscal year, netting 853.7 million Br in profit. The Bank's profit recorded 10pc growth, lower than the 48pc rate marked the previous year.

The earnings per share (EPS) of the Bank drooped slightly to 7.2 Br from 7.23 Br a share, which has a par value of 25 Br. The reduction was likely due to the injection of fresh capital. The Bank has increased its paid-up capital by 12pc to 3.2 billion Br.

Meseret Taye, the board chairperson of the 25-year-old Bank, states that the Bank achieved commendable growth despite the challenges.

"Continued security concerns, the persistent forex crunch, and the rising price levels on top of negative effects of the pandemic produced a notable business slowdown," said Meseret.

The main factor that contributed to increased profit after tax was an improvement in revenues from financial intermediation. Abyssinia's interest on loan advances and National Bank of Ethiopia (NBE) bills, which phased out recently, soared by 38pc to 4.9 billion Br. Increased lending activities drove this growth. During the year, the firm disbursed loans and advances of 36.8 billion Br, an increase of 57pc.

The growth in loans and advances is awe-inspiring, according to Abdulmenan Mohammed, a financial analyst.

Non-financial intermediation income of Abyssinia showed a mixed performance. Income from service charges and commissions increased by 51pc to 916 million Br. However, income from foreign dealings plummeted to a loss of 175.3 million Br from prior revenues of 81 million Br.

“The culprit for such a massive loss needs a thorough investigation, and rectifying measures should be taken,” Abdulmenan said.

Desalegn Yizengaw, vice president of the Bank in charge of financial management, says that the constant depreciation of the Birr against a basket of major foreign currencies has caused the loss.

"The year saw as high as 15pc depreciation of the Birr," said Desalegn, "this is higher than the growth rate of the previous years."

The annual pace of nominal depreciation of the Birr against the basket of major foreign currencies has been gradual and quite stable at about five percent in recent years. However, over the past year, the local currency has been continually devaluing by approximately 0.3pc every week.

A huge expansion followed the increase in revenues with expenses. Interest on savings increased by 20pc to 1.8 billion Br. The increase must have been due to a surge in deposits, which reached 47.6 billion Br, an increase of 48pc, mobilised from its 2.6 million customers. The loan-to-deposit ratio at Abyssinia increased to 77pc from 72.9pc.

The loan-to-deposit ratio of the Bank is incredible, according to the expert, who added that the management should be applauded for it.

"However, the high level of the ratio is somewhat concerning as it can cause liquidity problems as happened at the end of 2019 and early 2020," he said.

Last year, the National Bank of Ethiopia offered 14.5 billion Br in loans to the cash-strapped commercial banks at a competitive bidding interest rate. The banks have been grappling with a liquidity strain that has not been seen in the economy for over two decades.

"The management should watch the liquidity level," said the expert.

Liquidity issues are not determined by a single bank, according to Desalegn, who mentions inter-banking transactions through cheque and payment clearances.

"There was an industry-wide liquidity crisis in the country last year," he said, "and it was reflected at every bank."

Normally the period from October to February is known for the harvest season where there is a shortage of cash at the banks, according to Desalegn.

Salaries and benefits paid by Abyssinia soared by 86pc to 1.8 billion Br, and general administration costs went up by 30pc to 814 million Br.