Wegagen Bank , one of the major players in the private banking industry, has seen its financial performance for the year that ended on June 30, 2013 , ending in a similar fashion to the previous year. Its profit after tax only went up by 1.3pc, to 340.1 millionBr. The profit of the Bank grew by 3.8pc, which is against an industry average of 29pc. In both years, Wegagen's performance has been improved by recovering bad loans. The reversal of bad debt accounts and net profit after tax for the year ended 13.5pc and 2.71pc, respectively. This is an indication that Wegagen is struggling to push forward in major areas of business due to stiff competition in the industry. Wegagen has joined the ranks of some of the oldest in the industry, such as Awash, in choosing to boost its capital. "The global economic landscape hasn't been stabilised," reads the message of Araya G. Egzyabher, president of the Bank, published along with the report. "We need to build on our capital." The Bank is well capitalised if measured by its Capital Adequacy Ratio (CAR) of 34pc. Its paid-up capital has reached 1.1 billion Br, from 30 million Br when it was established in June 1997 . Performance related to interest earning activities has risen. Interest income on loans and advances, treasury bills, National Bank of Ethiopia (NBE) bonds and other deposits has gone up by 32.5pc to 585.5 millionBr. "This is a commendable performance," says Abdulmena Mohammed Hamza, accounts manager at the London -based Portobello Group . However, income from service charges and commissions has dropped to 116.7 millionBr.This income item has been in decline since 2010. "This should be concerning to the management of the bank and appropriate strategies should be designed to reverse the trend," Abdulmena recommends. Despite repeated attempts, officials of the Bank have not responded to Fortune's request for clarification on the performance of the Bank. As observed in the industry, the general administration expenses at Wegagen soared by 33.8pc to 138.7 millionBr. Wegagen is one of the banks that have managed to mobilise deposits, while several others in the industry have seen their deposit mobilisation sources drying up. Some of the worst performers include Abbay Bank , Berhan International Bank (BIB) and Lion International Bank (LIB). United Bank , Bank ofAbyssinia(BoA) and Dashen Bank are among those with good performance in the area of deposit mobilisation. It has managed to mobilise 7.55 billion Br - an increase of 32.1pc over that of the previous year. The Bank's balance sheet has expanded highly, with its total assets increasing by 24.5pc to 10.39 billionBr.It has disbursed loans and advances of 4.6 billion Br - an increase of 31.8pc. "Loan disbursements, deposit mobilisation and loan to deposits ratio at Wegagen are remarkable," says Abdulmena. Wegagen, nevertheless, declined in other areas. Liquidity analysis indicates that the liquidity position has declined in absolute and relative terms. Its cash and bank balances have declined to 2.23 billion Br from 2.6 billion Br. Liquid assets to total deposits ratio has decreased to 26pc from 45.2pc. On the other hand, the liquid assets to total assets ratio has gone down to 23pc from 31pc. Increased loan disbursements and investment in NBE five year bonds have accounted for this. In its bid to boost its deposit mobilisation effort, Wegagen planned to increase its branch network by adding 10 new branches to the 64 operating by the end of the previous year. Its plans have not only been realised, but surpassed with the addition of four more branches, thus pushing the total number of branches up to 78.
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