Financial institutions amass 3.8 bln birr profit
Three state owned financial institutions under the supervision of the Public Enterprises Holding and Administration Agency (PEHAA) have bagged a combined 3.8 billion birr profit before tax in the first quarter of the fiscal year, the agency said.
The agency indicated that the three institutions are the Commercial Bank of Ethiopia (CBE), Development Bank of Ethiopia (DBE) and Ethiopian Insurance Corporation (EIC).
However, the combined amount of the profit achieved by the trio is short of an earlier forecast, performing only 87.35 percent of the target set. The plan was to achieve at least 4.36 billion, the agency said.
Out of the stated 3.8 billion birr in profits, CBE contributed the lion’s share fetching 3.1 billion birr (81.23) while DBE and EIC contributed 455 million birr (11.93 percent) and 260.56 million birr (6.83 percent) respectively.
The performance of the three financial organizations was evaluated this week in a meeting held at the Agency’s headquarters, chaired by the Agency’s Director General, Habtanu Hailemichael.
During the evaluation meeting, it was disclosed that the stated combined profit was mainly generated from banking and insurance services that were planned for the first quarter of the Ethiopian fiscal year.
The target was to perform a total of 19.99 billion birr while their actual performance was 18.89 billion birr, which is five percent lower than the target.
Agency officials stated DBE’s performance this year is exciting as it has started to perform better after grappling with bankruptcy in recent years.
It can be recalled that in June this year, the parliament approved 21.2 billion birr (about USD 613 million) in long term loan to DBE.
The loan to DBE is interest-free with a five year grace period and will be paid in 14 years. The financial institution had reported around 40 percent nonperforming loan (around 16 billion birr or about USD 463 million).
Currently nonperforming loans of the Bank have declined to 33 percent, stated a report by the Budget and Finance Committee of the Parliament in the previous parliamentary year.
It was also indicated that providing additional money to DBE will enable the Bank recover and improve on its performance.
Investors used 121 failed agricultural projects among others to access loans from DBE without collateral. In most cases, the investors used land leasing papers as collateral to secure the loans and then disappeared.