Ethiopian banks continue to make strides in the African banking landscape, contributing five institutions to the 2024 African Top 100 Banks list. Leading the charge is the state-owned Commercial Bank of Ethiopia (CBE), which ranks third in East Africa and 28th in Africa overall. CBE reported a Tier 1 capital of $1 billion and an impressive return on equity (ROE) of 30%, a reflection of its dominant position in the Ethiopian market.
Over the past year, CBE has demonstrated significant growth, adding 4.7 million new customer accounts, bringing its total customer base to an impressive 45 million. Total deposits increased to over 1.17 trillion ETB, with a notable incremental deposit of 120.7 billion ETB. In addition, loan collections reached 171.2 billion ETB, surpassing the bank’s target by 4%. Out of 218 billion ETB in loan disbursements, 198.3 billion ETB was allocated to the private sector, underscoring the bank’s critical role in supporting Ethiopia’s economic development.
The Development Bank of Ethiopia (DBE), another state-owned institution, holds the fifth spot in East Africa and 44th in Africa. DBE’s Tier 1 capital reached $613 million, solidifying its place as one of the region’s key financial players.
Among Ethiopia’s private banks, Awash International Bank ranks 68th, making it the top privately-owned bank in the country, while Dashen Bank follows at 87th. Bank of Abyssinia, which re-entered the Top 100 list at 89th after dropping out the previous year, rounds out Ethiopia’s presence in the rankings.
Ethiopian banks, however, face a challenging economic environment. The significant devaluation of the Ethiopian birr against the dollar, which began in late July 2024, is likely to impact the rankings of Ethiopian banks in the coming year. The devaluation could reduce their Tier 1 capital when measured in dollars, potentially pushing some banks further down the list.
Despite these challenges, the anticipated launch of the Ethiopian Securities Exchange (ESX) is expected to present new opportunities for Ethiopian banks. The ESX will provide a platform for these banks to raise capital and expand their operations, crucial for servicing Ethiopia’s fast-growing economy. Additionally, the entry of foreign banks into the Ethiopian market, a result of a 2022 policy by the Council of Ministers, will further drive competition and growth.
With Ethiopia’s economy continuing to expand, bolstered by the development of its capital markets and increasing foreign interest, Ethiopian banks are well-positioned for further growth. The capital infusion from the upcoming ESX and the anticipated influx of foreign investments will likely propel these banks into a more competitive position on the continent.
As Ethiopia navigates economic challenges and seizes emerging opportunities, its banks are set to play a pivotal role in the country’s financial and economic transformation.
Source: African Business
