Rebounding from a slump in annual profits over the last couple of years, the Oromia International Bank ended the 2016-17 budget year with a 16.8 percent rise in net profits, to 217.6 million birr.
However, the bank witnessed a successive decline in its earnings per share (EPS) on a share having a par value of 1,000 birr. As of June 30, 2017, Oromia reported an EPS of 278 birr, a 10.3 percent decline from the previous year. Moreover, the bank has gone through the same trend of declining EPS from 2015 to 2016 too. It reported 364 birr EPS in 2015, sliding to 310 the next year.
As far as the last reporting year is concerned, bank officials associated the decrease in EPS to an aggressive expansion of the bank’s paid-up capital.
“We have tremendously increased our paid-up capital,” Abie Sano, president of OIB, told The Reporter.
Its balance sheet indicates that OIB has boosted its paid-up capital to 1.16 billion birr, raising it by almost 246.4 million birr from the preceding reporting year’s.
Looking more into its overall performance, the bank has aggressively invested in non-conventional banking such as interest free banking (IFB), with current total deposits of 2.19 billion birr showing a 75.5 percent increase.
Moreover, IFB total financing disbursement has also shown a 107.33 percent increase from the previous reporting year’s.
Both deposit mobilization and financing disbursement of IFB proportion to the total corporate deposit, loan and advance increased by 16.36 and 12.82 percent from the previous 13.38 and 8.82 percent, respectively.
This shows how assiduously the bank has been working on IFB. According to its report, OIB gives IFB service in 219 of its 223 branches. Moreover, the bank managed to raise its customer base from 97,530 to 167,451.
Explaining the significant increase in IFB, Abie said, “We have a comparative advantage over other banks when it comes to IFB.”
He also attributed the increase in IFB portfolio to the fact that the IFB side of the bank at the moment took only direct expense of the bank while both direct and indirect expense of the bank is included in the conventional banking.
“At the moment, we are investing in a technology which will bring a new form where direct and indirect expenses will be included in both conventional banking and IFB,” the president told The Reporter.
On the other hand, OIB’s total deposit reached 13.41 billion birr, an increase of 4.06 billion over last year’s performance. By the same token, total loan and advance also increased by 42.2 percent to 8.23 billion birr.
The total income of OIB has also climbed by 28.4 percent to 1.49 billion birr. Aside from this increase of total income, a gain in foreign exchange, particularly from remittances, has declined over the years.
As of the reporting year, income from foreign currency transactions has declined from 46.3 million to 25 million birr. In 2015, the bank reported 51 million birr in income from foreign currency transaction.
Abie attributed the decline to the nation-wide shortage of forex and the difference margin in exchange rate between the formal and the parallel market.
OIB currently works with more than a dozen remittance-processing companies even though the inflow is lower than expectations.
In addition to the aforementioned reasons for the decline, a bank official whose name is withheld upon request attributed the decline to security problems and network interruption in Oromia where most bank branches are located.
For some reasons, we do not know how our bank became a prime target of intentional Internet and network blackouts.
“The continuous interruption has cost us a lot,” said the official.
Moreover, it was sometimes difficult to move cash from branches to the head office, resulting in liquidity problems, he said.
The bank’s total expense has shown the same increasing trend, rising to 1.12 billion birr, a 33 percent increase.
From the total expense, salaryies and employee benefits took the lion’s share at 421.38 million birr.
As of June 30, 2017 the total number of bank employees stood at 2,880.
OIB was established in 2008 with a paid-up capital of 91.2 million birr. The same year, its authorized capital and subscribed capital was 1.5 billion birr and 279.2 million birr, respectively.
After almost a decade of being in the industry, OIB’s authorized and subscribed capital is more than 3 billion birr.
