Zemen Bank, the 10-year-old private bank, posted a two percent growth rate in the last fiscal year.

The bank reported 271 million Br in profit with a shareholder return of 286 Br, which has dwindled by 26pc.

Stagnation of profit growth and a massive increase in capital led to the decline of earnings per share (EPS), according to Abdulmenan Mohammed, a financial statement analyst.

“Even if the EPS declined, the shareholders still have it in the capital,” said Dereje Zebene, president of the Bank since last year after moving from Awash Bank.

The shareholders of the bank have raised the paid-up capital of Zemen to 1.1 billion Br in the reported time.

The slight profit growth was registered as a result of income increasing from interest and services. Interest on loans, advances and NBE bonds increased by half to reach 712.4 million Br.

The bank's income from fees, commissions and foreign exchange declined by five percent and 41pc recording 320.2 million Br and 97.7 million Br, respectively.

“Zemen needs to pay attention to this area of the business,” Abdulmenan told Fortune.

The central bank's recent regulation that compels banks to surrender nearly one-third of their foreign currency earnings to the national bank at a buying rate has caused the decline of Zemen's forex dealing, according to Dereje.

Zemen's expenses also soared in the last fiscal year. It paid 441.7 million Br for interest on deposits, a 50pc increase from two years ago. The bank’s personnel and other operating expenses also went up by 27pc to 324 million Br.

In the past two years, the growth in administration and operating costs at Zemen was higher than the increase in income.

The central bank's latest increase on the deposit interest rate expanded the bank's expenses, according to Dereje. He also added that the governing bank's regulation that coerces banks to increase their number of branches by 25pc every year as an additional reason for the surge in expenses.

Last year the macroeconomic committee under the Office of the Prime Minister Office raised the minimum interest rate on deposits to seven percent from five.

Abdulmenan argued that the bank needs to focus on costs.

“The management of Zemen should keep an eye on personnel and other operating expenses,” he said.

Abebe Dinku (Prof.), a chairperson of the board, also mentioned the challenges the bank went through in the last financial year.