Enat Bank, focused on empowering women and promoting financial inclusion, has shown significant growth in the banking industry despite its smaller size than other major banks such as Awash, Dashen, and Abyssinia. It has demonstrated better management of non-interest expenses and effective credit risk management, and a higher capital ratio compared to some larger banks.

In 2021/22, Enat Bank reported a net profit of 314.18 million Br, an increase of 36.8pc from the previous year, and its earning per share (EPS) rose from 158 Br to 185 Br, albeit still below the industry average of 34pc.

Enat Bank President Ermias Andargie attributed the lower EPS compared to the industry to offering shares to the public to meet the Bank's minimum paid-up capital, coupled with significant expansions.

Financial statement analyst Abdulmenan Mohammed, from London Portobello Ltd, argued that Enat Bank's capital is more than required for its operation and recommended using its existing capital efficiently.

The Bank's capital adequacy ratio (CAR) remained stable at 22.5pc, while its paid-up capital increased by 26pc to 1.93 billion Br. Its higher capital ratio compared to some larger banks, such as Awash International and Abyssinia banks, indicates that Enat Bank has a stronger capital base relative to its assets.

Shareholders decided to raise the Bank's capital to five billion Br by 2026 at the annual general assembly at Millenium Hall held in December 2022. Board chairwoman Frehiwot Worku urged shareholders to pay off their subscribed shares and raise the amount to meet the capital requirement set by the National Bank of Ethiopia (NBE) before the deadline.

Enat Bank's assets grew by 17.6pc to 17.21 billion Br, ranking second among its peers. Abay Bank led the league with a little over 40 billion Br, while Debub Global Bank and Addis International Bank followed with 14.08 billion Br and 10.8 billion Br, respectively.

The Bank's total equity increased by 25pc to 2.5 billion Br, positioning it 400 million Br higher than Addis International and Debub Global. Enat Bank disbursed loans and advances of 11.21 billion Br, a 25.1pc increase, securing a place ahead of Debub Global Bank (9.48 billion Br) and Addis International Bank (6.1 billion Br), while Abay Bank led with 26.9 billion Br.

However, not all shareholders were content with the Enat Bank's performance.

Dinku Kassaye, a former employee at the Bank, bought 25,000 Br worth of shares for his wife but was disappointed with the dividends received, which fell short of his expectations. He believes the Bank has a better chance of recovery if the management aligns its leadership with its mission.

“The management needs to be reformed,” he said.

Enat Bank's unique focus on empowering women and promoting financial inclusion set it apart in the Ethiopian banking sector. It places particular emphasis on products and services tailored to the needs of women entrepreneurs and business owners, such as Women's Entrepreneurship Development Project (WEDP) loans and the Enat Women Saving Account.

Despite its smaller size, Enat Bank has carved out a unique niche in the Ethiopian banking sector by focusing on women's financial empowerment. Its growth rates, capital ratio, and social impact efforts position it as a strong player with the potential to expand its market share and influence in the coming years.

One potential challenge for the executives of Enat Bank is its smaller branch network compared to larger banks. With more than 104 branches, its limited reach may affect its ability to serve customers in remote areas.

"We extensively worked on branch expansions," said Ermias.

Ermias's journey in the banking industry began a quarter of a century ago, serving in various positions at the Bank of Abyssinia for 15 years. Joining Enat Bank a decade ago, he was a deputy president in charge of corporate services for six years before assuming the top job in December 2020, replacing Wondwossen Teshome.

Various liquidity measures show that the liquidity level at Enat has increased in value but declined in relative terms. Its cash and bank balances grew by 7.2pc to 3.18 billion Br, while cash and bank balances to total assets decreased to 18.5pc from 20.3%.

“Despite the reductions, the liquidity level is reasonable," said Abdulmenan.

Enat Bank mobilised deposits of 13.05 billion Br, a 16.1pc increase, and the loan-to-deposit ratio rose to 85.9pc from 79.8pc. Abay Bank mobilised more than double the amount, while Debub Global Bank and Addis International Bank mobilised 10.99 billion Br and 7.9 billion Br, respectively.

Abdulmenan commended the Bank`s executives on a job well done about deposit mobilisation.

Enat Bank, incorporated in 2012 with 135.5 million Br paid-up capital raised from 7,972 shareholders, is relatively smaller in assets, loans, and profitability. However, its substantial growth rate in assets, loans, and advances are higher than in some larger banks, such as United and Nib International.

PUBLISHED ON Apr 10,2023 [ VOL 24 , NO 1197]

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