Berhan Bank, one of the late entrants to the private banking industry, posted a slight profit increase during the last fiscal year, recording 327.85 million Br.

The firm's shareholder return declined by 33pc to 20.36 Br from two years prior.

The profit growth of the firm has slowed down due to a newly introduced reporting system, International Financial Reporting Standards (IFRS), according to Abraham Alaro, president of the Bank.

In preparations to report with IFRS, the bank re-audited its financial statements of the past two years. In the process, the asset, income and expenses of the bank were adjusted.

The increase in the number of shares is also the source of the decline in dividends, according to Abraham.

Last fiscal year, Berhan sold new shares to its 15,000 shareholders to raise 680 million Br in an attempt to meet capital requirements set by the National Bank of Ethiopia (NBE). The central bank has established a minimum paid-up capital threshhold for private banks of two billion Birr.

Berhan Bank's paid-up capital reached 1.7 billion Br. The Bank also increased its capital by two percent in the reporting period.

"We are investing in the Bank's future, and this is just a necessary step to take," Abraham told Fortune.

Shareholders' acceptance of the slight growth and the decline of the EPS is part of the effort to put the Bank in a strong financial position.

"We would have loved it if we could get more returns," says Daniel Wondimu, Chairperson of Berhan Insurance, one of the major shareholders of the Bank. "But as we know, the Bank is on the right growth track, and the results are good."

In terms of income, 2017/2018 was a good year for Berhan, managing to increase its income by 60.5pc. Income from loans, advances and NBE bills reached 1.11 billion Br. Income from service charges & commissions and foreign exchange dealing decreased by 5.6pc and 6.26pc, respectively.

The bank earned 343.31 million Br from service charges and commissions and 62.15 million Br from foreign exchange transactions.

The declines must have been due to stiff competition in the industry coupled with volatile international business, according to Abdulemenan Mohammed, a financial expert with over a decade and a half of experience.

Board chairperson of the Bank, Gumachew Kassie, echoed the expert's opinion on the annual report.

"Formidable challenges characterise the year," said Gumachew, "A sluggish export sector, acute shortage of foreign currency and political unrest have undermined the smooth functioning of the bank's operations."

Despite the challenges, deposits grew by 41.6pc, reaching 10.8 billion Br. The attainment of the resource mobilisation effort came up with the expansion of the bank's outlets and an increase in the number of depositors. The number of depositors at the bank reached over half a million. The Bank opened 21 additional branches, reaching a total of 182 branches across the country.

The firm disbursed 7.2 billion Br in loans and advances, a 33pc increase from the preceding year. This makes the loan-to-deposit ratio of the Bank 65.1pc. For the past two years loan disbursement showed a slight decline. During the preceding year, the loan-to-deposit ratio of the bank was 68.8pc.

Berhan's loan-to-deposit ratio stood one percentage point lower than the industry average.