Deposits Surge, Gold Revenues Fuel Money Supply Growth

Total bank deposits reached 3.55 trillion Br in the 2024/25 fiscal year, boosted by a 380 billion Br rise from the previous year.

Gold exports played a major role, pushing money supply growth to 35pc, driven by 3.5 billion dollars in revenue, recent data released by the Central Bank disclosed. Recent policy changes, including market-based pricing and upfront payments to suppliers, have helped revive the gold trade.

The banking industry maintained a capital adequacy ratio of 19.1pc, comfortably above the 15pc regulatory minimum.

However, despite these gains, the Central Bank disclosed that a 4.5pc fall in net Treasury bill financing to 100 billion Br, following the removal of the mandatory T-bill purchase requirement for commercial banks in September this year.

Financial analyst Mered B. Fikireyohannes, of Pragma Capital Investment Advisory attributed the decline to a liquidity crunch, noting that 90pc of T-bills are purchased by the Commercial Bank of Ethiopia (CBE) and pension funds. The Ministry of Finance provides up to 20pc interest on long-term T-bills, yet investor appetite remains cautious.

Mered observed that most financing remains focused on short-term bills, which are heavily oversubscribed but offer limited profit margins.

“Banks are concentrating on short-term refinancing to manage liquidity,” he told Fortune. "Lending remains more profitable, with loan rates reaching as high as 25pc."

In September alone, the government mobilised 53.35 billion Br through two Treasury bill auctions, attracting total bids of 56.5 billion Br and an oversubscription rate of 105.8pc. Investor interest was concentrated in short-term maturities, particularly the 28-day and 91-day bills, while the 364-day instruments drew limited demand.

Recent monetary tightening lifted the loan deposits ratio to 24pc, driving a 78pc surge in new loan disbursements. Private banks accounted for 77pc of total lending.

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