Wegagen Bank’s provision expense has shown sharp reduction in the past financial year.
The year that ended on June 30, has seen the financial powerhouse netting in four folds in profits which catalyzed its recovery from previous year’s poor performances.
From the 2021/22 financial year report that the bank unleashed a few weeks ago, the bank finances highlighted that its deposit mobilization elevated by 2.4 billion birr to sit at 33.9 billion birr which is an eight percent increase compared to the preceding year.
As usual, the savings deposit took the lion’s share of the mobilization with 61 percent, followed by demand deposit which constituted 28 percent, while the deposit account stood at about 2.3 million with an unusual drop of 2.6 percent from the year prior.
“The decrease is attributable to the regulatory body’s directive of clearing customer’s account information and merging different accounts of the same person under one customers ID number,” the annual report explains.
Regarding the interest free banking segment, the bank’s outstanding mobilization stood at 1.6 billion birr with five percent increment while the sector financing leveled at 339 million birr.
The outstanding loans and advances rose by 2.9 billion birr or 11 percent in a single year to stand at 30.3 billion birr.
The investment in Treasury bills and other securities of the bank reached 4.3 billion birr at the end of the reporting period making the total loans and advances of Treasury bill and debt financing to stand at 34.5 billion birr as of June 30.
In the year under review, the bank’s asset increased by 9 percent to reach 43.1 billion birr while the paid up capital bulged to 3.4 billion birr.
In this period, Wegagen amassed 5.1 billion birr of which interest income from loans and advances contributed to 73 percent for the inflow.
A rare occurrence for the sector saw Wegagen’s expense for the year remarkably shrink compared to the 2020/21 financial year. The annual report indicated that the total expense had dropped by over six percent or 300 million birr from 4.8 billion birr a year ago to 4.5 billion birr.
“The decrease is primarily due to a huge reduction in provision expense following improved loan collection,” the annual report justified and added the cost management practice that the bank undertook contributed for the result. For the year, provision expense plummeted by 101 percent, while expense on interest took 40 percent of the total expense. The amortization intangible assets and staff salary and benefit increased by 23, 24 and 7 percentages respectively.
In the reporting period the bank was in a good position to mitigate challenges that it faced a year ago, leading to profit attainment. As a result the profit before tax for the financial firm rose to 572 million birr which is an almost three times increase from 193 million birr a year ago.
“Despite a myriad of challenges occurring during the reporting period and a year before, the bank recovered and rebounded on its growth trajectory,” the report read.
The profit after tax stood at 551.4 million birr that increased by 435 percent in contrast to 127 million birr from the previous year.
Similarly, for the year in review, the earnings per share inclined by four folds reaching 16.6 percent.