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Executives at United Bank SC had a good day
yesterday at the Hilton Addis, reporting their rosy
annual performance from the last fiscal year to the
shareholders of the Bank in the ninth annual general
meeting. Eyesus Work Zafu, board chairman, proudly
disclosed that the bank grossed a net profit of 48.2
million Br, a 47pc rise from 32.8 million Br in the
previous fiscal year.
Reminiscing the hurdles the Bank had to pass in the
2006/07 fiscal year, the Chairman once again
expressed his discontent on what he considers an
unlawful and unfair directive issued by the National
Bank of Ethiopia (NBE), the federal entity that
regulates the financial sector and sets monetary
policy.
United has repeatedly been in a row with NBE over a
strict directive the central bank issued amid a
flourishing of new banks in Ethiopia.
The directive contends that at least 75pc of the
board of directors at any bank must hold a minimum
of a BA Degree. Moreover, directors are not allowed
to serve more than two consecutive terms in a
certain board.
The directive that left United flabbergasted,
however, was the instruction that bars board members
from serving in two different financial
institutions.
Four Board members of United were also members of
the board of its sister company, United Insurance,
when the directive was issued.
Left with no other option, the Bank called an
extraordinary general assembly on July 3, 2007, and
replaced the members.
Eyesus Work also mentioned other challenges facing
the bank: a liquidity crunch and the government’s
decision to give CBE the privilege of opening
Letters of Credit (LC) for any trade exchange with
China.
Amidst the challenges, however, United shareholders
seem to have been impressed with the achievements.
They were rewarded with a dividend of 33pc, though
the dividends will be diluted when they reach the
shareholders, as two million new shares have been
sold.
The shares were sold in less than four months in a
bid to upgrade the Bank’s capital from 200 million
Br to 400 million Br.
“Though we planned to finalise selling the shares in
five years time, we managed to sell all the shares
in less than four months,” he told the shareholders.
The Bank’s provision for doubtful loans and
advances, however doubled from 6.3 million Br the
previous fiscal year to 13.2 million Br in the
reported year. Ironically, the Bank reported Non
Performing Loans (NPL) of only three per cent, which
is one of the lowest rates in the country’s
industry.
“The increase in provisions shows that NPLs have
increased in absolute terms,” a banking expert told
Fortune. ”It is when compared with the total
loans and advances that NPLs are low.”
Private banks are reporting unprecedented profits of
late. This is partly attributable to the 10.1pc
economic growth, which, according to the government,
could be ascribed to strong performances in
agriculture, industry and services.
The amount of loans the bank disbursed has also
risen to 1.4 billion Br, registering a 41pc growth
compared to the previous fiscal year, while its
deposits have grown to 1.7 billion Br, a 30pc rise.
The performance by United, whose total assets have
risen to 2.18 billion Br from 1.6 billion Br in
2005/06, seems to have impressed Berhanu Getaneh,
the president.
“Our bank has always been standing on its own.
Nobody propped up our bank from above, below, left
or right,” he told the crowd in response to a
shareholder’s question concerning formulas that the
bank could have adopted from a rival bank.
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