Debub Global Bank Recovers from Previous Loss with 18m Br Profit

• The Bank has mobilised 500 million Br deposit, disburses 266 million Br loans and advances

Debub Global Bank S.C. has registered a profit after tax of 18.5 million Br for the fiscal year, recovering from the previous year’s loss of 14.3 million Br; it has registered earnings per share of 90.9 Br.

Debub, which has worked hard in financial intermediations and other services such service charges, commissions and foreign exchange dealings has earned 37.2 million Br from interest incomes, which increasedby 427pc from last year. Non-interest earnings have staggeringly went up to 44.2 million Br showing an increase of 414pc.

Debub has disbursed loans and advances of 266.6 million Br and invested 94.8 million Br in the National Bank of Ethiopia (NBE) bond. The loan and advances that the Bank has disbursed has shown an increase of 168pc and the investment in the NBE bonds represents 1.8pc of the Bank’s total assets and 18.9pc of its deposit.

Although the amount that Debub disbursed in loans and advances has increased from the preceding year, its ratio to the total deposits mobilized, which is 500 million growing by 216pc, has declined from 62.7pc to 53pc. This stands to be lower than the industry average of 57pc.

“This is unsatisfactory performance and needs improvement by investing the liquid resources Debub is holding,” says Abdulmenan Mohammed Hamza, an analyst that works for the London based Portobello Ltd.

For the current fiscal year, the Bank is planning to expand both the deposits and the loans with special focus on the liquid asset management.

“We are working towards doubling the deposit we mobilize, increasing the loan we disburse accordingly,” says Addisu Habba, president of the Bank since September. “We will also put an eye on the liquid assets so as not to have idle money in the coffers and not to fall short of the operating expenses.”

As the income that Debub has generated increased, the expenses went up from 27.9 million in the preceding year to 47.3 million in the reporting year, showing an increase of 69pc. The major contributors to the expenses of the Bank are the general administrative expenses and the employment salaries and benefits which were 20 million Br and 23.5 million Br respectively. The interest that Debub paid on saving account, special account, time deposit and NBE borrowing increased from 1.2 million Br in the prior year to 11.6 million Br in this reporting year.

“In comparison to the increase in total income, the expansion in expenses is very reasonable,” comments Abdulmenan.

As the loan disbursement increased, the provision that the bank maintained for doubtful debts increased by 211pc to 2.8 million Br.

The total assets of the Bank expanded as the income did. Debub’s total assets showed an increase of 130pc reaching 874.8 million Br.

The paid-up capital of Debub reached 177 million Br, increasing by 39pc. But the NBE directive requires it to reach 500 million Br by 2016, which will bring tough times ahead for Debub.

“We will reach this amount by the time set and we are even planning to surpass it and reach a capital of one billion Br,” says Addisu.

Debub, which has opened five new branches during the reporting fiscal year reaching a total of 19 branches, aims to reach the required capital by making the shareholders pay the subscribed capital of the Bank.

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