For the fiscal year 2021/22, the Bank reported a profit of 16.5 billion Br, a commendable 24pc increase from the previous year. The performance, a sign of soundness in a somewhat unsteady economy, underlines its executives’ adept manoeuvring through the upheavals that have beset the country’s financial sector.

A closer examination of the Bank’s financial statement reveals a nuanced story of growth, shadowed by the challenges inherent in aggressive expansion and lending practices.

Interest income, the Bank’s lifeblood, swelled by 25.8pc to reach 82.2 billion Br. More striking, however, was the astronomical 140pc surge in non-interest income, amounting to 35.8 billion Br, largely fueled by gains from foreign currency transactions. The remarkable increase reflects CBE’s immersion in the foreign exchange market, a crucial component of its revenue stream.

Yet, celebrating these achievements is somewhat muted by the glaring spike in impairment losses on loans and advances, which ballooned by an alarming 8.7 times to 25.7 billion Br. Representing about a third of the Bank’s interest income, this casts a shadow over its lending practices and raises questions about the sustainability of its growth model. It also brings to light the considerable loans extended to state-owned enterprises encountering repayment difficulties.

According to the financial statement analyst, Abdulmenan Mohammed (PhD), this requires a thorough investigation of lending practices by the Bank.

“It should be very concerning,” he said.

At the helm during this critical period is Abie Sano, who assumed the presidency of the Bank in March 2020. He received his undergraduate studies in accounting from Addis Abeba University (AAU) two decades ago and completed his postgraduate studies in business administration at the University of London, in 2010.

Abie steered the CBE through these turbulent times, where it steered the fine line between revenue growth and the escalation of both interest and non-interest expenses, which rose by 16.8pc and 25.8pc, respectively. 

“It’s not like we had a major sick loan,” said Abie.

However, liquidity remains a critical area of focus. Despite Abie’s assurances of a sound liquidity position, analyses reveal a relatively tight liquidity scenario, with cash and cash equivalents representing a modest proportion of total assets and deposits. Contrasted with the Bank’s strategy of financing a portion of its loans through other liabilities, it uncovers the complexities of managing liquidity in a rapidly growing bank.

“We’re at a good liquidity position,” said  Abie.

Since its inception in 1942, the CBE has played an indispensable role in the financial sector, expanding its loan and advance portfolio, bonds, and equity holdings by 19.1pc to 990.7 billion Br. Coupled with a 21.1pc increase in deposits to 890.9 billion Br, the performance speaks to the CBE’s vigour and strategic positioning in the market. Nonetheless, the slight dip in the loan-to-deposit ratio to 111pc points to its high reliance on leveraging debt for growth, a strategy that, while aggressive, carries inherent risks.

“This is considered very high,” said Abdulmenan.

CBE’s capital and non-distributable reserves saw a modest increase of 7.7pc to 60 billion Br, reflecting a strategic, albeit cautious, approach to boosting its foundation. This is particularly relevant in a context where much of the Bank’s investments in corporate bonds are backed by government guarantees, a factor that plays into Abie’s and his team’s risk assessment and the Board’s capital allocation strategies.