Political uncertainty and the severe foreign exchange crunch in the economy has dragged down the growth rate of Nib Bank during the last fiscal year.

The 19-year-old Nib did, however, manage to increase its profit by four percent to 514.85 million Br. This growth rate is much lower than the previous year, which stood at 45pc.

This, coupled with a 16pc crease in paid-up capital to bring the figure to 2.08 billion Br, led the firm’s earnings per share to slump by 15 Br to 134 Br.

The period can at best be characterised by formidable challenges that the banking sector faced, according to Woldetensai Woldegiorgis, board chairperson of the Bank.

Sluggish growth in the export sector, acute shortage of foreign currency that severely affected import activities and social and political unrest that had a detrimental effect on the smooth functioning of daily business operations are a few of the challenges, according to Woldetensai.

Detailed observation of the profit and loss account of the bank shows that Nib reported mixed results in generating income.

It performed well in financial intermediation operations. Interest on loans, advances and bonds of the National Bank of Ethiopia increased by 43pc to 2.07 billion Br, while fees and commissions increased by only a percentage point to 319.82 million Br.

What the Bank earned last year from foreign exchange dealing slumped by half, however, reporting only 46.42 million Br.

“The decline of income from forex dealings is shocking,” commented Abdulemanan Mohammed, a financial statement analyst with a decade and a half of experience. “This area of business needs thorough attention.”

Kibru Fondja, the president of the Bank, attributes stringent requirements by the central bank in forex allocation coupled with the macroeconomic problems of the country were the primary reasons for the disappointing result.

The central bank’s direction, which compels all banks to provide forex for anyone who applies for foreign currencies, has severely affected the bank, according to the president.

“We lost many of our customers, as we couldn't provide them with forex while trying to allocate foreign currency to other applicants,” Kibru told Fortune. “On top that, all of the banks have been scrambling for the forex that comes into the country.”

The total expenses at Nib have also increased by 46pc to 1.8 billion Br. Interest expense went up by 65pc, salaries and benefits increased by 38pc and other operating expenses increased by 18pc.

“The bank mobilised a huge deposit last year with a higher interest rate,” said Kibru. “This made our expense on interest skyrocket.”

At Nib, ongoing projects consumed a large chunk of cash.

"To prevent the operations from this effect, the Bank aggressively mobilised large deposits," Kibru told Fortune.