About six years in operation, Abay Bank has been making steady progress in the competitive Ethiopian financial sector. Ato Yehuala Gessesse, President, Abay Bank, speaks on the bank’s push to etch its name on the minds of customers
How would you assess Ethiopia’s attractiveness for investments, and opportunities for investors in the banking sector?
Ethiopia’s banking sector has been performing well for the past couple of years and we are working with international banks. I have been working in the banking sector for the last 16 years. So, I believe I know the sector very well. It holds a lot of opportunities for investors.
What is more, Ethiopia’s economy is growing very fast with GDP rising by double digit. For the fact that our country’s population is over 90 million with less banking service exposure makes it attractive. Besides, infrastructure development is at an impressive speed. So, the business environment is conducive for would-be players in several sectors of the economy, including the financial sector. Ethiopia’s banking sector is vibrant, stable and well- regulated.
To what extent would government’s plan to open the financial sector to international players impact the financial sector?
Opening the financial sector to international players has its advantages and disadvantages. Liberalisation of the financial sector would bring new experience and knowledge from the international markets which will help the sector to be competitive globally. However, we need to enhance our capacity in banking management and service delivery to compete favourably. Moreover, we need to develop our supervision capacity. On the whole, we need to critically evaluate the pros and cons before opening the sector to international players.
What are the reasons for Abay Bank’s impressive earnings and what do you expect this fiscal year?
Indeed, in its first year of operation, Abay Bank netted a profit of 24.2 million Birr. In the year ended June 30, 2015, the bank registered a gross profit of Birr 168 million, showing a growth of 122% (Birr 92.3 million) from the preceding year. I must say, increased loan provision, enhanced foreign currency earnings and proper cost management owe much to the bank’s increase in profit. And we have a lot of products that generate foreign income. One of such is Diaspora banking. In this scheme, if Ethiopians and those of Ethiopian origin living abroad want to own houses in Ethiopia and are able to deposit a portion of the cost in foreign currency in our bank, we provide a loan to partially cover cost of the house. The source of foreign exchange in Ethiopia is remittance and export. We provide exporters with the required facility. We support a good number of exporters. We have a remittance agreement with many transfer agents. We also have correspondent banks in Europe and America as well as the rest of the world.
How feasible is your plan to generate more forex income this year?
So far, we are on track. Abay Bank has facility for exporters. Thus, with anticipated more coffee exports this year, we should earn more foreign exchange. Indeed, we saw our foreign income earnings leap last year by an impressive 117 percent.
For Abay Bank, image building is a priority. Are you promoting the bank to the international arena?
We are promoting our services both locally and internationally. Specifically, we are promoting our Diaspora banking and remittance services to the international markets. We are working to add more features to our Diaspora banking to attract more of the Diaspora. We are assessing real estate companies who will work with us. We have an agreement with one listed Chinese company (Tsehay Real Estate). We are looking for more trusted real estate developers to partner with us. We plan to promote and include other products tailored to the needs of our customers.
Abay Bank will be celebrating its 6th anniversary this November. What moments or milestones would you highlight in these six years of activity?
Deposits mobilization is growing very fast. It is rising by 52% per year, which is impressive. We also increased our capital within a short period of time to the required level. We have a good number of customers. Abay Bank introduced core banking technology which has helped to expedite the services we render to our customers. Moreover, the bank acquired card banking, mobile and internet banking technology. These are some of the milestones worth documenting. We are building a strong bank. Abay Bank is growing very fast. Our asset quality is good and non-performing loan is below 2%.
Abay Bank is a responsible bank giving back to society through a CSR programme. What is the programme you personally feel the most proud of?
As a bank, we believe we need to give back to the society. We are partly funding residential buildings for farmers’ associations located in Amhara Region ‘Bura Nest”, which will serve as a model to other farmers in collaboration with other stakeholders. It will help to improve the living standards of farmers. We are also participating in educational projects.
Where do you want to see the bank in five years’ time under your mandate?
I have solid experience in the banking sector. Abay Bank is one of the most competent banks in Ethiopia. We are a profitable bank with excellent service delivery and satisfied customers. We want to increase our customer base. We are trying to build a bank of international standard. We already have a plan to achieve this ambition in the next five years. We want to be the bank of choice for Ethiopians and foreign investors.