Lion Bank Registers Growth Third Year in Row

Income from interest on loans and advances helped Lion International Bank, one of the mid-sized banks, net 643.1 million Br in profit over the last fiscal year. The profit grew by 19.3pc compared with the previous period.

However, earnings per share (EPS), the net profit divided by the number of shares subscribed by 11,348 shareholders, sank by 11.5pc to 8.4 Br. The reduction was caused by a significant increase in paid-up capital, which grew by 40pc to nearly 2.2 billion Br. By the end of the year, the banking industry's total capital, including that of the Development Bank of Ethiopia and the Commercial Bank of Ethiopia, reached 112.8 billion Br.

The remarkable growth in profit after tax was undermined by the massive injection of fresh capital, according to Abdulmenan Mohammed, a financial statement analyst.

"Lion needs to have a capitalisation policy that maximises the returns of its shareholders," said Abdulmenan.

Berihun Yirdaw, a shareholder for the past six years, says the Bank achieved well above his revised expectations. He says that the pandemic's outbreak, the recurrent unrest, and the battered economy had worried him a lot.

"Such incidents made me readjust my initial expectations," said Berihun, adding that the Bank has been in a better position over the past three years, recovering from a stagnation in growth.

In his remarks in the financial statement, Gebretsadkan Gebretensae (Lt. Gen), the board chairperson of Lion, echoed Berihun's points, saying that salient challenges in the year left the banking business in gloomy circumstances.

Last year was overshadowed by the unprecedented COVID-19 pandemic, widespread political and social unrest, a downward spiral in export sector performance, and the subsequent chronic shortages in foreign currency, according to Gebretsadkan.

“Despite these challenges,” Gebretsadkan wrote, “the sustained growth recorded in the level of local deposits was an opportunity for the banking business.”

The Bank recorded a mixed performance in income-generating activities. Lion’s income from interest on loans, advances and NBE bonds soared by 59pc to 2.7 billion Br, while fees and commissions declined by 11pc to 197.6 million Br. Gains on foreign exchange dealings slumped by 93.3pc to 5.7 million Br, while other income also slightly dropped by three percent to 230.3 million Br.

The performance of non-financial intermediation operations is disappointing, according to Abdulmenan, who recommends that the management come up with ways to improve this area of business.

The increase in income was followed by a massive surge in expenses. Interest on deposits spiked by 62.3pc to 990 million Br. Employees’ salaries and benefits increased by 38pc to 670.7 million Br, and other operating expenses increased by 48.4pc to 376.8 million Br.