WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-11-30 Time: 14:00:04 Posted By: News Poster
By Hailu Teklehaimanot
Wegagen Bank earned a net profit of 223.3 million Br after tax in the 2009/10 fiscal year, a 23.7pc increase over its performance of the previous year, the bank announced at its 17th ordinary and 10th extraordinary meeting at the Hilton Addis on November 18, 2010.
However, its deposit mobilisation of 264.9 million Br against 392 million Br extended in loans, was weaker than that of some of the other private banks which have announced their profits.
Wegagen, which has a paid-up capital of 633.2 million Br, the highest among private banks, seems to have been concerned about excess liquidity which arises from the credit cap placed on private banks, as the deposits mobilised by its 51 branches revealed.
“Excessive liquidity hurts the bank as we cannot give out as many loans as we want to,” Araya G. Egzihaber, president of the bank, told Fortune. “Our deposits have accumulated to 3.8 billion Br, and we did not mobilise more due to the costs in interest rate we would have incurred.”
The impact of this was reflected in the reduction of net cash and cash equivalents by 80 million Br.
However, the recent announcement of National Bank of Ethiopia (NBE) that it would soon lift the credit cap if inflation remains in the single digits, would make the bank change its strategy, according to Araya.
During the same year, the bank’s net interest earned after provision for doubtful loans has increased by 15.8 million Br despite the total net interest earned by banks which have announced their performance reports decreasing by 41.7 million Br.
This was due to the revision of the bank’s credit cap by NBE, according to Araya.
For shareholders, this year’s earnings per share (EPS) of 38pc per 1,000 Br share was slightly higher than the industry average of 37pc. Yet, it showed a slight decline in comparison with its EPS of the previous year (38.9pc). The return on capital (RoC) of Wegagen (30.2pc) also showed a slight decrease from its previous returns of 30.6pc.
“Return on capital is below the average for private banks, which is 34.5pc,” said Abdulmena Mohammed, accounts manager for Portobello Group Ltd, a London based holding company with subsidiaries in property investments and developments.
This was due to the bank floating shares which affected both EPS and RoC slightly, according to Araya.
The bank has sold 21.4 million Br worth of shares since 2008.
“Although shareholders would be happier in the short-term if we had not sold shares, which increased the EPS, this would help the bank to achieve long-term stability,” Araya said.
Wegagen has shown an impressive performance related to doubtful debts, according to Abdulmena, who has worked as an external auditor in Ethiopia for eight years.
Its expenses for doubtful debts stood at 3.5pc of the net interest income, which is less than the five per cent limit set.
“This resulted from us thoroughly checking the projects proposed before giving out loans,” Araya told Fortune. “Most of the time our debtors pay back on time.”
Original date published: 29 November 2010
Source: http://allafrica.com/stories/201011300884.html?viewall=1