Sinafikish Tekle and Abebe Dinku (far left), board directors, Dereje Zenebe, president, Ermias Eshetu, board chairman, Eneye Bemir, deputy board chair at Zemen Bank's annual general assembly at Milleni-um Hall.


Zemen Bank roared with impressive net profit growth from its last operational year, almost doubling its growth record from the previous year.

President of the Bank, Dereje Zenebe, characterised the outcome as “remarkable operational and financial results”, netting 1.48 billion Br, soaring by 55pc, much higher than the preceding year’s growth rate of 29pc. However, the growth could not be translated into higher earnings per share (EPS) that declined to 455 Br, close to 162pc of last year’s industry average amongst private banks.

“This must have been due to the fresh injection of capital,” said Abdulmenan Mohammed, a financial analyst based in London who keenly follows developments in the financial sector.



Nonetheless, the decline in EPS does little to take the spotlight away from the impressive performance.

Zemen Bank’s paid-up capital grew to 3.64 billion Br, showing a 32.5pc increase but still 27pc short of the central bank’s minimum capital threshold set for 2026. Ermias Eshetu, chairman of the board, wants to see Zemen prioritise improving operational efficiency and financial resilience through a capital increase plan designed to address regulatory requirements.



His shareholders voted to increase the capital to 15 billion Br in five years. It is a trend in the banking industry, with Awash Bank leading the pack with an ambition to reach one billion dollars.

Zemen Bank’s capital and non-distributable reserves increased by 35.7pc to 5.19 billion Br with a capital adequacy ratio (CAR) of 23.3pc. This reveals that Zemen had a solid capital base, according to Abdulmenan.



The Bank’s President attributed global and domestic occurrences, such as macroeconomic risks, new market entrants, and non-banks financial services, to challenges expected for the next operational year.

“Our strong operational performance is also characteristic of our strategic investment in infrastructure, digital capacity, and human capital during the financial year,” he told shareholders who met at the Millennium Hall on Africa Avenue (Bole Road) on November 14, 2022.


Dereje believes raising capital should not be the only option to compete with foreign banks; it should be addressed once the number of newcomers and their entry modality is determined.


Hagos Woldekidan is among over 5,000 shareholders acquiring 100,000 Br worth of shares from Zemen Bank. The lower premium rates in shares attracted his attention choosing Zemen over two dozen banks. He was happy with what he earned as a dividend in his first year. He hopes to see Zemen Bank disbursing more loans in the coming years when foreign banks are thought to challenge incumbents in the industry.

The total loans and advances of the Bank reached 21.12 billion Br, increasing by 50.5pc, half the industry’s average for private banks in the year 2020/21. It is a far cry from the 126.9 billion Br advances the lead private bank in the industry, Awash, made last year. Enat Bank registered one of the lowest in the industry, with total loans and advances almost half the size of Zemen Bank.

Interest in loans and advances and central bank bonds increased by 36pc to 2.43 billion Br, and income from fees, commissions and gains from foreign exchange dealings registered 1.68 billion Br.

The significant income growth was accompanied by parallel evolution in expenses.

Interest expenses increased by 26.2pc to 938 million Br, wages swelled by 68pc to 649 million Br, while other operating costs rose to 440 million Br. Zemen Bank’s expenditure on personnel outpaced the company’s income growth by a wide margin; Abdulmenan cautioned the management to keep an eye on wages.


Dereje contends that higher personnel costs result from a branch expansion and recruits. Zemen added 272 new employees and 17 new branches, bringing the total to 80. It is an exponential growth in networks, considering the Bank’s arguable history of intriguing a single-branch banking model to the industry.

Zemen Bank’s total deposit reached 26.87 billion Br showing an increase of 41.5pc, lower by 32pc of the average deposits of private banks in 2020/21. The loan-to-deposit ratio went up by five percent to 78.6pc. In the expert’s words, it is a good improvement that enabled Zemen to boost its interest income.

The total assets of Zemen expanded by 39.6pc to 35.12 billion Br, an amount far too short compared to Awash’s 183 billion Br. The investment in the central bank’s bonds and bills with a five-year maturity, accounting for 6.98pc of assets and 9.12pc of the bank’s total deposit, fell by 12.5pc to 2.45 billion Br. The provision for loans and assets impairments is 63.2 million Br, showing an 11.6pc increase.

Abdulmenan described it as a “reasonable” increase.



PUBLISHED ON Dec 10,2022 [ VOL 23 , NO 1180]


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