Saturday, April 20, 2024
BusinessNew strategy quadruples CBE’s private sector loan share

New strategy quadruples CBE’s private sector loan share

CBE eyes two trillion birr in assets

The Commercial Bank of Ethiopia (CBE) introduced a new strategy to increase the share of the private sector from its credit portfolio from the current 13 percent to 40 percent in the next five years.

The state bank, which plans to provide 100 billion birr in loans in the current fiscal year, devised a new five year strategy with the help of McKinsey and Co., which took 28 weeks to finalize the blueprint that is being readied for implementation.

The state bank has been the backbone of public projects and financiers of other State Owned Enterprises (SoEs). Providing low interest loans for these entities, such actions have been weighing on its profit, apart from the half a trillion birr loan the SOEs failed to pay.

“We planned to restructure our loan proportion and rebalance the low loan for the private sector. We have sufficient resources, so we do not need resource restructuring,” said Emebet Melesse (PhD), Reform and Transformation project office VP at CBE.

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Emebet said the bank will also introduce new loan schemes for the private sector soon, including less collateralized credits for entrepreneurs. Education loans, consumer credit, and loyalty loans are also among the new schemes the bank plans to provide for its depositors.

The banking industry’s outstanding loans and advances reached 1.4 trillion birr by December 2021, with the CBE constituting 60 percent. CBE’s share of total deposits also reached 56 percent, increasing by two percent from June 2020.

The strategy, which identified twelve pillars, also recommended CBE introduces various new products, including a new platform dubbed Omnichannel, which will provide mobile, internet, wallet and card banking on a single application.

“We designed various products which are currently in the pipeline. We will launch them over the next six months,” Emebet said.

With the new strategy, CBE envisages to become a world class commercial bank by 2025.

“CBE is strong but regarding modernization, it is way backwards. Some of the findings and recommendations forwarded by the new strategy cannot be solved by CBE alone. They are policy matters. So, we have forwarded them to the government,” added Emebet.

[speaker]
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