Enat Bank registered 208.6 million Br in profit over the last fiscal year, a modest 3.5pc increase from the previous year. The Bank's profit growth rate has slowed down compared to the preceding year's performance that saw a 33pc surge.

Despite the moderate profit rise, the earnings per share fell by 13pc to 161 Br mainly due to the 15.7pc growth in paid-up capital, which reached 1.4 billion Br.

Hanna Tilahun, the board chairperson, stated that the past fiscal year was quite different from previous ones in many ways.

"During the budget preparation and approval process," said Hanna, "it was hard to predict that the liquidity crunch would be so significant as to jeopardise banking operations at large."

Last year, the banking industry witnessed a liquidity strain that has not been seen in the economy for over two decades. Aiming to alleviate the problem, the National Bank of Ethiopia (NBE) has availed 14.5 billion Br in loans, in two rounds, to the cash-strapped private commercial banks at a competitive bidding interest rate.

The pandemic, which Hanna characterised as a new overwhelming crisis, came onto the scene while the Bank was struggling to recover and rebalance from the staggering liquidity crunch.

To help customers affected by the pandemic, Enat removed a three-month interest rate for borrowers, especially for businesses in the hotel and tourism industry, and waived commission fees for Letters of Credit (LC) extensions.

These measures cost the Bank about 15 million Br, according to Ermias Andarge, the acting president of Enat, which has 18,874 shareholders. Ermias replaced Wondwossen Teshome, the recently departed president.

Despite these challenges, the Bank has performed well in loan and advance disbursement, which stands at 6.5 billion Br, a 27pc rise. This is accompanied by a 17pc increase in deposits, which reached 8.4 billion Br. The 5.8 percentage point increase in the ratio of loans to deposits pushed the rate up to 77.3pc.

This is an impressive increase, for which the management of the Bank should be appreciated, according to Abdulmenan Mohammed, a financial statement analyst.

"However, the management should take extra caution regarding further increases, as it may undermine the liquidity level of the Bank," he said.

Ermias says the loan to deposit ratio of the Bank has spiked due to the five-year NBE Bill's phaseout and the significant growth of deposit mobilisation.

In October 2019, the central bank repealed the mandatory NBE bill, which required banks to surrender 27pc of their gross loans and advances to the central bank. With a maturity period of five years and five percent interest rate, the bond aims to mobilise funding for the Development Bank of Ethiopia (DBE), which finances selected areas.

The total income of Enat rose by 31.5pc to 1.3 billion Br. Income from interest on loans, investment in NBE bonds and time deposits, reached 1.1 billion Br, amounting to a 41pc surge. Income from service charges and commissions also showed a notable spike of 31.4pc to 222.8 million Br, while earnings from foreign exchange dealings stagnated at zero for the second consecutive year.

This phenomenon was observed across several banks, according to Abdulmenan, who attributed stiff competition and volatile international trade as causes.

Ermias also says that foreign currency earning is the major challenge facing the Bank.