United Bank, one of the private banks in Ethiopis, announced a profit of 231.8 million birr after taxes for the last fiscal year, on Thursday. The Bank raised 13.3
million birr in one week from the sale of 133, 477 shares in the first ever public auction of bank shares.
The move to expand the paid up capital of the bank by 40.2% has lowered the bank’s EPS which had stood at 52.8% for the budget year according to Abdulmena Mohammed, account manager of the London based Portobello Group.
The increase in paid up capital also lowered the Return on Equity from 27.4% the previous fiscal year to 25.7% explained Berhanu Getaneh, President of United Bank.
In spite the decrease in the return of shareholders the move to raise paid up capital will strengthen the bank, minimize its risks and raise single borrower limits according to Berhanu.It is alleged that United suffered liquidity problems in spite of increased its performance mainly due to the credit cap set by the national bank. Ato Berhanu disagrees with this assessment and states that the bank has managed to make extensive loans following the lift of the two year credit cap by the National Bank last April.
The Bank is highly liquid and will work hard to harness its resources to generate higher returns for its shareholders said Ato Berhanu. Should the bank encounter liquidity problems then it can solve them through creative banking activities he added.
United Bank with Awash International Bank (AIB) and Nib International Bank (NIB) has embarked on a joint venture ‘Premier Switch Solutions’ to provide a shared card banking system.
Source: Addis Fortune
