Awash Bank’s earnings skyrocket to close to 10 billion birr

By our staff reporter
Awash Bank, Ethiopia’s flagship and powerful private bank, continues to set pace with earnings coming in at close to 10 billion birr, for the financial year that ended on June 30.
The financial powerhouse has also demonstrated its strength in terms of revenue creation, which was up 40 percent in comparison to the previous year.
According to the financial firm’s annual report, its interest income was the primary source of the 8.2 billion birr rise in the bank’s income to 28.8 billion birr, during the year.
The year saw a 55 percent increase in interest income to nearly 22 billion birr, while fees and commission revenue increased by 13 percent to 5.6 billion birr.
Interest income accounted for 76 percent of the total income, with fees and commissions making up 19 percent to stand second.
The bank did note that other operational earnings had decreased by 17 percent, with the primary cause of this dip being the decline in gain from foreign currency transactions and translation.
It reported that compared to the 2021/22 financial year, the expenditure had increased by more than 44 percent this year, totaling 19.1 billion birr.
The aggressive branch expansion that went hand in hand with the growth in staff members contributed the personnel expense, which increased by 3.4 billion birr, or 60 percent, to 9.1 billion birr.
In a same vein, interest expenses have grown by 38 percent to 6.1 billion birr, or 32 percent of the overall expenses.
In comparison to the 7.4 billion birr recorded in the 2021/22 financial year, the bank’s 9.8 billion birr profit before tax for the year represented an almost one-third increase.
The bank, in the reporting year, maintained its top spot in the private banking sector in terms of earnings after taxes, with a total of seven billion birr, a 31 percent growth. The bank made 5.3 billion birr in profit after taxes a year earlier.
Even if the increase in profits per share (EPS) is minimal when compared to the previous year’s performance, EPS has also continued to the rise.
The bank achieved a 577 birr EPS for a 1,000 birr par value in the reporting period; which in the previous year was 570 birr, while in the 2020/2021 financial year, was at 470 birr.
The bank’s total deposit mobilization climbed by 23 percent, or 35.4 billion birr, over the specified time to reach 187.4 billion birr.
The study cites the bank’s growing customer base, range of deposit products and services, and growth of traditional and digital service delivery channels as the main drivers of resource increases.
In terms of interest-free banking, the amount deposited has increased by 37 percent to 15.7 billion birr. In terms of loans and advances, it has increased by a quarter from the previous year to reach 162 billion birr.
There were 129 billion birr in outstanding loans and advices a year ago. With regards to non-performing loans (NPLs), the bank maintained a tough stance at around 1 percent that made it stand in a strong position since the NPL should not be greater than 5 percent as required by the regulatory agency.
The bank has maintained its position as a leader in the private banking industry with regard to foreign currency generation.
The amount of foreign money generated this year has increased by 20 percent over the year before, totaling about USD 1.5 billion.
Awash said in a statement that by offering a range of trade financing services to import and export; it notably contributed to the facilitation of international commerce.
As of June 30, 2023, the proportion of outstanding loans and advances in the export industry had reached 31 billion birr, while loans and advances designated for import operations stood at over 21 billion birr.
Recall that a year ago, the bank’s shareholders decided to increase the bank’s capital to 55 billion birr in four years.
The report further stated, “This strategic decision will allow the bank to ensure its leadership position in all aspects of the competition, expand its operation, invest in new technologies, and provide better services to its customers.”
The bank’s paid-up capital for the financial year 2022/2023 was 14.6 billion birr, up 4.4 billion birr, or 42 percent, from the year that ended on June 30, 2022.
For the first time in Ethiopian private bank history, the bank’s entire asset value has crossed 200 billion birr.
According to the annual report, the bank’s asset increased by 41 billion birr, or more than 22 percent, during the period under review, reaching 224 billion birr.
“This growth is primarily driven by the expansion of loans and advances besides investments on fixed assets,” the report stated.
From the entire asset 83 percent is held in deposit.
To get to 875 locations, which is among the highest in the industry, 150 new branches were opened nationwide, in the reported year.