Ethiopia’s financial sector has remained robust by all standards over the last fiscal year, according to recent reports. A few months ago, the National Bank of Ethiopia (NBE) released its first Financial Sector Stability Report, highlighting the sector’s health. However, the report also noted the emergence of certain risks, stressing the need for vigilance and follow-up measures to maintain the soundness and security of the financial system.
The 2016 fiscal year showed continued growth in the banking sector across various key metrics, including value, capital, profit, and deposit collections. Banks operating in Ethiopia have continued to be profitable, with total assets surpassing three trillion birr, according to financial data.
Bank Assets
The NBE’s official data indicates that the total assets of the country’s banks reached 2.84 trillion birr in 2016. The state-owned Commercial Bank of Ethiopia held 1.2 trillion birr of these assets, while the remaining assets were distributed among 30 private banks.
Private banks saw significant growth in 2016, with their combined assets reaching over 1.9 trillion birr. Awash Bank led the pack, boasting assets worth over 300 billion birr. Abyssinia Bank followed with more than 221.5 billion birr in assets, and Dashen Bank had assets exceeding 183.5 billion birr. Other notable private banks included Bank of Oromia with 140 billion birr and Union Bank with 100 billion birr in assets.
Loan Disbursements
The banks have also been key players in credit supply, with the total loans issued in 2016 exceeding 1.1 trillion birr. Despite a cap by the NBE limiting loan growth to 14%, private banks managed to meet and surpass this target.
Awash Bank, the largest private lender, reported a loan portfolio exceeding 183 billion birr. Abyssinia Bank was also a top lender, with loans totaling over 165 billion birr by the end of the fiscal year. Dashen Bank followed closely, with loans amounting to over 117.8 billion birr, while Oromia Cooperative Bank disbursed nearly 100 billion birr in loans, reaching 99.1 billion birr by the end of the financial year.
Capital Growth
The capital base of private banks also saw significant growth, with the total paid-up capital reaching 160 billion birr. Among private banks, Awash Bank led in capital, with paid-up capital surpassing 20 billion birr by the end of the fiscal year. Abyssinia Bank raised its paid-up capital to 14 billion birr, while Dashen Bank reached 12 billion birr.
Several other banks, including Oromia Cooperative Bank (11.16 billion birr), Daman Bank (7.5 billion birr), Sinqqee Bank (7.7 billion birr), Tseday Bank (9.8 billion birr), Neb Bank (7.5 billion birr), Amhara Bank (7.7 billion birr), and Hibret Bank (7 billion birr), have also managed to significantly boost their paid-up capital, meeting or surpassing the National Bank of Ethiopia’s requirement.
Despite emerging risks, Ethiopia’s banking sector remains profitable and continues to grow in terms of assets, loan disbursements, and capital accumulation. Awash Bank, Abyssinia Bank, and Dashen Bank lead the private banking industry, setting benchmarks in asset management, lending, and capital growth. The sector’s robust performance underscores the importance of continued oversight to maintain its stability.
