Zemen’s EPS shoots as one of the industry’s highest
Zemen Bank, the corporate oriented financial firm, expands its profit that surpassed a billion birr by almost 60 percent whilst its revenue has climbed by 36 percent.
The bank’s annual report indicated that their earnings per share (EPS) have continued as one of the leading in the industry.
The foreign currency earnings that is mainly supported by export business has also stated as one of the major in the sector besides major contributor for the government 30 percent share, which has been imposed on banks to share their foreign currency earnings to the government as of last year.
The 2019/20 annual report of Zemen Bank has highlighted that it has enabled to secure over a billion birr gross profit with an increment of 59 percent compared with 657 million birr of a 2018/19 financial year.
While the total revenue for the year that closed on June 30 has reached at almost 2.2 billion birr with additional 570 million birr or 36 percent generation compared with the preceding year.
As the sector experience the interest income has seat atop by the share of 68 percent and followed by fees and commissions that mainly dominated by foreign exchange related operations.
The bank balance sheet indicated that for the year the income secured from interest has reached at 1.5 billion birr from over a billion birr a year ago, while the fees and commissions income stood at over 868 million birr that makes the net operating income to reach at 1.55 billion birr from almost 1.1 billion birr in 2018/19 financial year.
The bank’s total comprehensive income after tax for the period has grown to 767 million birr from 490 million birr a year ago.
“The profit performance in a rate of return when measured against capital and total asset of the bank resulted in return on average equity of 27.4 percent while a return on average assets reached 4.5 percent,” the board of directors report explained.
Similarly the bank EPS has boosted to 46.2 percent from about 40 percent in the preceding year. The EPS amount is one of the highest in the industry.
On its annual report the bank said that industry wide record shows that Zemen’s five years average EPS is above the private and peer banks standing at 35.19 percent. The private banks average EPS was 31.8 percent.
One of the major performances for Zemen Bank in the past financial year was the activity on international banking that it generated close to USD 383 million with the increment of over 3 percent. The annual report indicated that from the total hard currency generation the export business has taken the lion share by 62 percent and followed by income transfer with 36.5 percent.
The average inflow of foreign currency for the bank, which is one of the major hard currency generators in the sector, was USD 32 million per month.
Like other activities the deposit mobilization has increased by close to a quarter, meanwhile the subsector in the banking industry become very stiff competition. At the period ended on June 30, 2020 the deposit mobilization has steered up to 14.4 billion birr from 11.6 billion birr.
Regarding loans and advances it has increased by 27.6 percent and reached at 9.7 billion birr from 7.6 billion birr.
The loans and advances that are disbursed by the bank has been distributed for industry with 24 percent share, domestic trade and service by 19.6 percent share, hotel and tourism 14 percent and export 11 percent.
The total asset of the bank has grown by over a quarter to 18.5 billion birr from 14.7 billion birr in 2018/19. Similarly its total equity has increased to 3.1 billion birr from 2.3 billion birr.
At the general assembly that was held at Golf Club on Saturday December 26 shareholders have agreed to expand the bank capital by 150 percent to reach at five billion birr that will be paid in three years time.
Two weeks ago, Zemen Bank has hired a global giant Price WaterHouse Coopers (PwC) to design a ten year road map and five year strategic plan.
At the time Abebe Dinku (Prof), Chairperson of Board of Directors of Zemen, said that the banking sector in Ethiopia is one of the fastest growing sector in the country and reminded that the coming years will be very tough for the sector since close to 20 new banks are under formation which double the number of currently existing banks in the market.
“We expect it to review the institutional capacity and current business model and the firm will propose practices that are innovative and workable on the corporate strategy plan that will enable the bank to shoot up in all aspects,” he said.
Dereje Zebene, President of Zemen, said that The PwC road map will show the way how Zemen will operate. The strategy also considers the financial sector development in the country and the region and it will also look into the regional integration.
In its12 year history the financial firm has applied two different five year strategic plans. While due to the effect of COVID 19, it has been delayed in engaging or hiring of another strategic planner that is to be conducted by an independent consultant.