Banks in Ethiopia Continue to Grow Despite Challenges

Addis Ababa August09/2022/:- The Ethiopian banking sector has registered a remarkable growth despite the fact that it faced various challenges such as COVID-19, internal conflict, and the Ukraine-Russia crisis, Dr. Yinager Dessie said.
In a meeting held with CEOs of banks, on 8th August 2022 at Hilton Hotel, H.E. Dr. Yinager Dessie, Governor of the National Bank of Ethiopia (NBE), said that the banking sector has continued to registering growth in asset, capital, deposit, loan distribution, loan collection and other financial growth indicators.
“In terms of financial soundness,” the Governor added “ as indicated in Capital Adequacy Ratio, Liquidity and Non-Performing Loan (NPLs), the banking sector is healthy sound.
The Governor said “Over the last four years, NBE did embark on various policy issues, which help to address bottleneck and lingering problems in the financial sector” Proclamations, directives, and other legal instruments were issued, and amended. Besides, exchange rate, interest rate and demonetization were also among the major endeavors.”
With regard to the banking sector, and digital financial system, Ato Frezer Ayalew, Director of Banking Supervision, and Ato Solomon Damtew, Director of Payment Settlement and System, explained that remarkable progress have been registered.
According to Ato Ferezer, the number of banks has increased from18 to 30, and their branches reached to 8,944, as of June 30, 2022, from 5,564 four years ago.
With the expansion of bank branches, the ratio of branch per population reached to 1: 11, 516 (one bank branch serves 11, 516 people). Besides, the number of deposit accounts has increased from 40.04 billion birr to 83.3 billion birr. Hence, the total deposits, over the last four years, have increased from 899 billion in 2019, to 1.7 trillion Birr in 2022.
The total capital of the banks has boosted from 98.9 billion in 2019 to 199.1 billion birr in 2022. The growth registers 27 percent average yearly growth. Moreover, total asset of banks has ascended from 1.3 trillion birr to 2.4 trillion Birr registering 92 percent growth.
Net income of banks has increased from 22.4 billion birr in 2019 to 49.9 billion birr in 2022 registering 122 percent growth, as it was indicated.
According to NBE, the banks have continued to operate in a safe and sound manner, though there is a need for strengthening advanced preparation for opening banking sector to foreign investors was emphasized.
Appreciating the progress registered over the past four years, presidents and CEO’s of the banks suggested to join hands to building human capital and to mitigating illegal acts in financial sector.
Currently 29 commercial banks, one development bank, 18 insurance companies, one re-insurance company, 40 microfinance institutions, six Capital goods Finance/Lease companies, and eight payment instrument issuers/system operators are operating in Ethiopia.

The National Bank of Ethiopia was established in 1963 by proclamation 206 of 1963 and began operation in January 1964. Prior to this proclamation, the Bank used to carry out dual activities, i.e. commercial banking and central banking.

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