Addis Ababa, Ethiopia – Authorities at the Public Financial Institutions Supervisory Agency (PISA) is contemplating the merge the two state-owned banks, the Construction and Business Bank (CBB) and the Commercial Bank of Ethiopia (CBE), The Reporter learnt.
CBB’s lack of clear mission and its subsequent impact on the bank’s financial viability exhibited in the dramatic decline of profit for the past couple of years triggered the authorities to look into the final fate and possible remedies to save the oldest mortgage bank in Ethiopia.
One indication of the grave financial condition that bank is in is the 21.3 million birr gross profit which the bank has secured during the six-month operations of the current financial year, a disappointing 76 percent lower than the target it set for the period. Furthermore, the figure is also 40.3 percent less compared with the same period in the previous year.
In the first six months of 2014/15 fiscal year, CBB has recorded a total income of 573.2 million birr surpassing the 511.2 million birr target it has set for itself for the period. According to a document obtained by The Reporter, the unexpected revenue the bank generated during the period is attributed to a surge in the other incomes category as a result of high gains accrued to the bank due to foreign currency fluctuation recorded during the period. The bank’s total expense during the period in question has also climbed by a whopping 122 percent from the target 420 million birr reaching 515.9 million, the document stated. The bank also attributed this huge increase in expense to the loss it had incurred on foreign currency fluctuation in the same period.
The bank also disbursed 678.3 million birr loan including NBE’s 27 percent bill showing a decline of 52.7 percent from the planned 1.45 billion birr in the half year operation.
Read more at: The Reporter