Shareholders of Awash Insurance may have reasons to get displeased despite a remarkable net profit the firm has made from its operations last year.

Awash has reported a 270 million Br profit in 2020/21, a jump by 23pc from the previous year. However, earnings per share (EPS), industry jargon for the benefit to shareholders, dropped to 178 Br, an 11pc fall, after the firm decided to boost its capital base.

Awash's profit demonstrates how little the financial sector's bottom line is affected in the face of instability, the COVID-19 pandemic and an economic slowdown tightening the budgets of businesses and individuals.

Despite the economic downturn and increasing instability, Awash has opted to boost its paid-up capital to 755 million Br last year, maintaining its position as one of the highest-capitalised insurance firms in the industry. The aggregate capital of the 18 insurance companies reached 10.6 billion Br in March 2021, according to a quarterly report the National Bank of Ethiopia (NBE) releases. This growth represents an 18pc increment from last year, and private insurers account for nearly three-quarters of it.

The banking industry has also seen a rise of 13.6pc in total capital, hitting 125 billion Br last month. Private commercial banks account for a little over half the amount.

“Given the various challenges Awash faced during the year, the profit increment, as well as capital buildup, are satisfactory,” said Kebede Borena, board chairperson of Awash Insurance, addressing shareholders met at the Hilton Hotel on October 30, 2021.

Ebsa Mohammed, an insurance expert and manager at Alpha Consultancy, applauds the efforts to increase capital.

"Growth in paid-up capital comes at the cost of earnings per share," said Ebsa. "It's a good sign either way."

Not all shareholders were displeased to see a drop in return for their investment.

Amsalu Bezuneh, a businessman in export and import, is one of the 1,670 shareholders. He has no qualms with the firm's performance this year and plans to buy more shares.