Dashen Bank saw its assets balloon last year, shying from hitting the 100 billion Br mark by five billion Birr. It is a phenomenal growth in a quarter of a century, recording a 39pc jump from the previous year.

Dashen Bank is among the first generation of private commercial banks whose growth in capital grew exponentially and its asset base expanded impressively. To the delight of shareholders, Dashen's equity went up to 10.1 billion Br, marking a 21.8pc jump. An injection of 909 million Br brought the Bank's paid-up capital up to 4.4 billion Br by the end of the fiscal year, half a billion Birr short of the central bank's revamped minimum threshold.

"The year has been a historic one for Dashen to show how the Bank has been growing in leaps and bounds,” Neway Beyene, board chairperson, said during the shareholders' assembly held at Mechare Meda on November 20, 2021.

Loans and advances climbed nearly by half to 61.7 billion Br last year, accounting for over two-thirds of the bank's total assets. Close to 2.3 billion Br of these loans were channelled through a Sharia-compliant interest-free window introduced by the Bank three years ago.

Nonetheless, the achievements were diminished by the slow growth of profit after tax and a dip in earnings per share (EPS) for shareholders. But none have suffered as much as its forex dealings.



The Bank netted 1.73 billion Br in profits last year, recording a 12pc growth.

Dashen Bank's latest figure on profit growth in comparison to the staggering 52.2pc growth it had attained in 2019/20, exceeding the industry average of 33pc. It resulted in close to four folds of the African standard for the year.

Asfaw Alemu, Dashen's president, says the Bank's performance is better measured before factoring in tax and legal reserves.

"These are requirements that fluctuate," he told Fortune.


Dashen's gross profits stood at 2.4 billion Br last year. This did not stop earnings per share declining to 471 Br, although marginally by 21 Br. This can be an impressive achievement compared to the African average on return of equities. In Africa, the average return for investments in banks was nine percent in 2020, according to McKinsey & Company, an international consulting firm.


This could be why shareholders do not seem too dismayed by the diminished dividends.

Alemayehu Teklu, 59, is one of the 2,065 Dashen shareholders who did not mind living with minor hiccups. He believes the Bank is doing well in every other variable.

"I've been reaping the benefits for years," Alemayehu told Fortune. "A little setback is nothing."

Dashen, incorporated in 1995 with a capital of 14.9 million Br, is among the most profitable private commercial banks. Even with the slight dip, the EPS recorded last year is higher than what the shareholders of most other banks can expect. The Bank mobilised 74.6 billion Br in deposits last year, marking a 39pc growth. Asfaw attributed the increase partly to a robust expansion in the branch network, reaching 454. Nearly 30 were opened last year.

The President ascribed the rise in deposits is the demonetisation process carried out last year. According to data from the central bank, aggregated bank deposits hit 1.3 trillion Br last year, an increase of 25pc.


Nonetheless, not every front brought a cause to celebrate for Dashen. Its loan-to-deposit ratio clocked in at 85.7pc last year, up from 79.8pc the year before. It has advanced a lot more loans than the resources it mobilised, passing the prudent ratio of 80pc.

“Dashen should be wary of further increase as it is pushing the limit,” says Abdulmenan Mohammed, a financial statement analyst based in London.

Dashen Bank's President is not alarmed by this. The status of nonperforming loans, which stood at two percent last year, is less than half of the five percent ceiling encouraged by the regulator.

Dashen recorded staggering losses in its foreign exchange dealings for the second year running. It bled 1.04 billion Br last year, nearly three times the 342 million Br loss it suffered in 2019/20.

Abdulmenan cautions Dashen's executives to review their currency risk management policies.

“The problem with foreign currency is not specific to Dashen or the banking industry,” argued Asfaw. “When things become normal, it'll improve."



PUBLISHED ON Dec 04,2021 [ VOL 22 , NO 1127]


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