NPLs hit 15% early last year, driving up provisions

Loan recovery reaches 11bln birr out of 25bln birr issued

Amhara Bank has taken former management staff to court over alleged corruption and multi-million birr mismanagement that executives say damaged the institution’s financial position.

Speaking at the bank’s fourth annual general meeting, Yohannes Ayalew (PhD), president of the bank, said internal reviews conducted after he assumed office revealed extensive misconduct that had persisted for years. He said the individuals implicated are now facing formal legal action.

The bank’s latest financial results reflect the scale of the impact. In the first quarter of the current fiscal year, Amhara Bank recorded a 924 million birr loss. Without this charge, profit before tax would have reached 1.6 billion birr, but the loss reduced it to 655 million birr. The bank also posted a 367 million birr operating loss linked to foreign-currency management challenges.

“This is where the bank stood when I took over,” Yohannes said, adding that performance has since improved. The bank posted 951mln birr profit before tax in the current quarter and projects full-year profit of 3.6 billion birr.

The institution also carried external debt of 18 million US dollars, suspended several financed projects, and faced slower activity in the export sector. Executives said declining customer confidence placed further pressure on performance.

Non-performing loans reached 15 percent in the second month of last fiscal year, resulting in high provision expenses. By year-end, the bank had issued 25 billion birr in loans and recovered 11 billion birr—forty-four percent—within eight months, a pace Yohannes described as uncommon in the domestic banking sector.

Lending to domestic trade and services, exports, and manufacturing accounted for 31.3 percent, 20.3 percent, and 13.7 percent of the loan portfolio, respectively. Together, these sectors represented 77.3 percent, or 20 billion birr, reflecting what executives described as a deliberate focus on financing activities central to economic growth.