NBE reserves grow by 15%

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Yinager Dessie (Photo: Anteneh Aklilu)

The National Bank of Ethiopia’s (NBE) first quarter bulletin for 2018/19 budget year indicated that at the end of first quarter of 2018/19, reserve money reached 174.8 billion birr, depicting 15 percent growth over last year’s same quarter.
Component wise, both currencies in circulation and bank deposits at NBE rose by 16.8 and 12.1 percent, respectively. This is almost similar to the preceding quarter which ended in June. The report indicated that the currencies in circulation in September 2017 were 94.9 billion which stood at 112.9 billion birr in June last year while the dropped to 110.8 at the first quarter of the fiscal year, which is at the end of September 2018. Despite the Bank’s deposits at NBE has increased in September compared with June 2018. The report shows that in September Banks’ deposits at NBE were 63.9 billion which were 4.4 percent increase compared with 61.2 billion birr in June 2018.
The quarterly bulletin stated that net foreign assets of the NBE declined by USD 283.9 million, while that of commercial banks increased by USD 214.9 million. Thus, gross international reserves as of September 30, 2018 were sufficient to cover 2.6 months of payments for import of goods and non- factor services for next fiscal year.
According to the report the number of bank branches has reached 4,986 by adding 229 new ones. Based on the number of branches one branch on average serves 19,788.41 people. Of the total bank branches, about 34.6 percent were located in Addis Ababa. The share of public banks in total bank branches was 30.6 percent while that of private banks stood at 69.4 percent.
At the end of first quarter of 2018/19, the total capital of the banking system reached 89 billion birr, depicting 11 percent annual growth. Of the total capital, private banks accounted for 39.8 percent while that of the Commercial Bank of Ethiopia and the Development Bank of Ethiopia were 51.5 percent and 8.7 percent, respectively, thereby putting the total capital share of the two public banks at 60.2 percent.
Meanwhile, the banking sector disbursed about 30.1 billion birr in new loans, registering a 31.8 percent annual increase. Of the total new loans disbursement, the share of public banks was 44.2 percent and that of private banks 55.8 percent. The major beneficiary of bank loans was industry accounting for 28.8 percent followed by domestic trade (18.3 percent), international trade (14.6 percent), and construction (12.9 percent), and agriculture (10 percent).
In the meantime, the loan collection of the banking sector reached 29.6 billion birr, about 24.4 percent higher than last year same period. Total outstanding credit of the banking system (excluding credit to government) increased to 405.7 billion birr, showing 22.9 percent annual growth. About 99.8 percent of the private banks and 48.1 percent of public banks’ loans went to finance the private sector.
During the first quarter of 2018/19, total merchandise export earnings (including electricity) amounted to USD 628 million depicting a 7.4 percent decline compared with the same quarter of last year. This was due to lower earnings from export of coffee (5.2 percent), oilseeds (22.4 percent), pulses (5.3 percent), fruits & vegetables (5.1), flower (2.9 percent), gold (45.2 percent), live-animals (51.4 percent) and electricity (25.2 percent). “The slowdown in export revenue was attributed to lower export volume, prices or both” it explained. The contraband activity in relation to gold and live animals has been a major challenge for the year. The report shows that the drop in percentage for the two export products is significant compared with the preceding year.
In the meantime, total merchandise import bills declined 8.7 percent to USD 3.7 billion compared with the same quarter last year on account of lower imported capital goods (20.4 percent), consumer (6.1 percent), semi-finished (22,5 percent) and miscellaneous goods (30.5 percent).
In contrast, the values of imported fuel surged 43.7 percent and that of raw materials 60.7 percent. As a point of reference for international oil price, the average price of Brent crude oil increased by 46 percent and reached USD 75.5 per barrel during the first quarter of 2018/19 vis-à-vis USD 51.7 a year ago.
During the first quarter of 2018/19, total transfer receipts increased by 7.4 percent to about USD 1.8 billion. This growth was attributed to an 11.7 percent increase in private transfers. Private individual transfers rose by 28.9 percent whereas NGO transfers declined by 51.7 percent. Hence, the current account balance (including official transfers) registered USD 1.04 billion in deficits during the first quarter of 2018/19, compared with USD 1.6 billion in deficits a year ago.
In contrast, capital account surplus reached USD 963.3 million about, 27.7 percent lower than last year’s same period. This performance was attributed to a (68.1 percent) slowdown in net official long term capital and 23 percent in FDI inflows.
As a result, the overall balance of payments recorded USD 69.1 million deficits compared to the USD 321 million deficit registered a year earlier.
At the end of September 2018, total deposit liabilities of the banking system reached 750.4 billion birr, indicating a 25.3 percent annual growth, which signified strong expansion of bank branches and improved access to finance, growing saving culture of the society and an increase in per capita income, according to the report.
Demand deposits accounted for 35.2 percent of total deposits and reached 264.3 billion birr showing a 17.1 percent annual growth. Similarly, saving deposits went up 32.7 percent and its share in total deposits reached 54.3 percent. Time deposits, which constituted 10.5 percent of the total deposit liabilities, increased 19.4 percent over the same period of last year. The share of public banks in total deposits outstanding was 61.3 percent and that of private banks 38.7 percent.
Total outstanding borrowing of the banking system stood at 66.4 billion birr, showing a 64 percent annual increase. Of the total borrowing, 58.2billion birr (88 percent) was from domestic and 8.1 billion birr (12 percent) from external sources.
During the review quarter, banks disbursed 30 billion birr in fresh loans, showing a 31.8 percent year-on-year growth. Of the total new loans disbursed, public banks accounted for 44.2 percent and private banks 55.8 percent.
The major beneficiary of bank loans was industry which took 8.6 billion birr (28.8 percent) followed by domestic trade (5.5 billion birr or 18.3 percent), international trade (4.4 billion birr or 14.6 percent), housing and construction (3.9 billion birr or 12.9 percent), and agriculture (3 billion birr or 10 percent). The remaining share was taken up by other economic sectors.
During the first quarter of 2018/19, a total of 544 investment projects having investment capital of 5.9 billion birr became operational. Both the number of investment projects and investment capital grew by a significant percentage over the previous year’s same period, though they declined by 22 and 54.7 percent, respectively compared with the previous quarter. The foreign investment comprised 199.2 million birr (3.4 percent).