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Message From The President
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I am profoundly honored to present the annual report of the Construction and Business Bank S.C’s operations in the fiscal year ended June 30, 2007.

            During the 2006/07 fiscal year, the Ethiopian economy was in a steady growth path characterized by a relatively high real GDP growth rate for the fourth time and  monetary stability. The real GDP grew by 11.4 percent during the same fiscal year.  According to the registered economic growth rate, the agricultural sector increased by 9.4  percent on its own, industry by 11 percent and the service sector by 13.5 percent during the fiscal year.  Among these major economic sectors that contributed to the registered growth, agriculture, industry and service covered 46, 13 and 41 percent respectively.  In general on average 11.8 percent annual real GDP growth rate has been registered between 2003/04 and 2006/07.
On the other hand, the general inflation rate exhibited significant rise from 12.3 percent in 2005/06 to 17.7 percent on 2006/07. This inflationary pressure is assumed to be a sign of an on going economic transformation as the economy takes off.

In another development, the performance of the external sector was encouraging.  According to the National Bank of Ethiopia’s report, export proceeds climbed to USD 1,185.1 million in 2006/07 from USD 1,000.3 million in 2005/06, exhibiting 18.47 percent growth.  On the same note, value of imports by end-use increased by 11.6 percent from the preceding year performance and reached USD 5,126.2 million in 2006/07.

In the inter-bank foreign exchange market, the official exchange rate of Birr against the US dollar continued its steady depreciation in the review year and stood at Birr 8.9275/ USD, reflecting a depreciation of 2.71 and 0.47 percent vis-á- vis the year 2005/06 and 2004/05 respectively.  Similarly, the parallel market exchange rate depreciated by 0.34 percent to reach Birr 9.0294/USD from Birr 8.999/USD in the preceding year.  As a result, the spread between the parallel and inter-bank rates was 1.14 percent during the fiscal year under review. 

The number of investment projects approved during the year at the Federal and Regional levels was 6,499. The total investment capital of these projects amounted to birr 94.7 billion, and when compared with the performance of the previous fiscal year, it depicted an increment of 19.1 percent.  Due to this increment, the demand for financial products and services in general and bank credit and international banking facilities in particular have grown considerably.  This created conducive environment for the  financial sector development and as a result , the total outstanding loans and advances and deposit of the overall banking system in the country reached Birr 44.5 billion and Birr 53.5 billion respectively as at end of June 30, 2007. 

Due to the above encouraging development in the country and the endeavor of the management and staff of the Bank, CBB earned a record high gross profit of Birr 145.8 million (before provision and tax) during the reporting period.  Compared to the previous year’s profit level, it went up by 97.2 million or 49.4 percent. In fact this makes the Bank one of the best performing banks in the industry in terms of profit maximization.  On the same note, the total deposit of the Bank has increased by 16.8 percent over the preceding year’s balance and reached Birr 1,136.4 million as at June 30, 2007. The outstanding balance of loans and advances grew by 12.4 percent and stood at Birr 1,325.7 million. Consequently, the total asset of the Bank has reached Birr 1,884.2 million, and showed a 4.8 percent increase over the preceding year’s balance of Birr 1,797.2 million.  The level of capital and reserves also rose to Birr 170.3 million from its level of Birr 156.4 million in the previous year, exhibiting 8.0 percent growth.

In general, the Bank has registered commendable performance during the year as highlighted above. The implementation of the Bank's first five year Business Strategic Plan ended in this fiscal year and was an important milestone due to the fact that it has provided satisfaction for all stakeholders, and has become an invaluable reference for the second five year business strategic plan preparation. Moreover, activities such as Business Process Reengineering (BPR) are underway due to their significant contribution towards the envisaged organisational transformation.

Finally, I would like to seize this opportunity to convey my special thanks to our esteemed customers for their confidence in our Bank. My appreciation also goes to the Board of Directors for their commitment and able guidance throughout the year. I am also grateful to the management and staff of the Bank for their exemplary team spirit and efforts exerted during the fiscal year.

Thank you,