Enat Bank, a late entrant private bank, had an interesting last fiscal year, recording an impressive profit increase. However, the bank's net gain from the foreign currency exchange fell to nil.

In the reporting period, the Bank amassed 208.2 million Br in net profit, a 33pc increase much higher than the industry average. The private commercial banking industry that has a little over a quarter of a century of existence has an average growth rate of 20pc.

Despite recording a strong performance in terms of profit increase, the Bank's earnings per share (EPS) remained about the same. The return to shareholders remained largely flat at 185 Br as a result of a 23pc increase in paid-up capital to 1.2 billion Br.

The Bank, which reported that it was challenged with the foreign currency mobilisation owing to the slower economic growth and decline of export revenue, earned nothing from net foreign currency dealings. During the previous year, Enat netted 10.2 million Br from the sector.

"The problem [challenges in foreign currency mobilisation] was further exacerbated by an inadmissible, illicit and controlled act of certain market agents," remarked Hanna Tilahun, the chairperson of the board of directors at Enat.

The paid-up capital increase is made with the main aim of reaching two billion Birr, where the entire banking industry is heading toward, according to Wondwossen Teshome, president of Enat, which has over 18,000 shareholders.

“We've been working to balance the need to increase the Bank’s capital while at the same time maintaining the dividends for shareholders,” Wondwossen said.

Based on individual consent, shareholders also seeded three to five percent of their returns as a contribution toward a women’s special fund dedicated to promoting female entrepreneurship. The fund is allocated to support women entrepreneurs who cannot provide collateral to receive bank loans.

"This also contributed to the decline in EPS," Hanna told Fortune.

However, Abdulmenan Mohammed, a financial statement analyst with close to two decades of experience, cautioned the Bank's management to seriously think about its capitalisation policy.

"The Bank should balance between EPS and paid-up capital," he said. "Increasing the capital should not undermine the EPS."

In income-generating activities, the Bank registered mixed results. It recorded a sound financial intermediation operation that resulted in a 52pc increase in interest on loans, investment in NBE bonds and time deposits, reaching 742.8 million Br.

On the contrary, service charges and commissions showed a notable drop of 31pc to 169.6 million Br, while income from new foreign exchange dealings plunged from 10.2 million Br to zero in the last fiscal year.

It is concerning, according to Abdulmenan.

"The Bank should come up with a strategy to improve this,” Abdulmenan remarked.

Even though Enat allocated foreign exchange for clients, the Bank has not been able to secure the required foreign currency exchange from the NBE, according to Wondwossen.