Despite economic difficulties, Zemen Bank, one of the nation’s top-performing financial institutions, builds on its achievements from previous financial years.
In the financial year 2023/24 that closed on June 30, the bank, under Dereje Zebene’s leadership, achieved remarkable success in every facet of its operations.
The bank has effectively achieved its yearly goal, according to the annual report that was presented to the general assembly on October 19.
For instance, its total revenue has reached about 7.8 billion birr, or 101 percent of the annual target. When compared to the same period last year, this is an astounding 35.3% increase.
According to the report, interest income accounted for the largest portion of total income, which came to 5.35 billion birr (68.9 percent). Service charges, commissions, and net foreign exchange income, which is mostly derived from foreign exchange-related operations, came in second and third, respectively, at 2.3 billion birr (29.6 percent).
One of the bank’s strongest business sectors is currency, which it supports heavily and collaborates with major export businesses and international organizations that operate in Ethiopia.
As of June 30, 2024, the bank’s total capital was at 12.3 billion birr, representing a 44.6 percent increase over the previous year.
The substantial expansion in primary capital components was the main driver of this increase. “Additionally, the bank’s paid-up capital increased by 2.45 billion birr (49.1%) from the previous year to 7.45 billion birr,” the report said.
According to Zemen’s CEO, Dereje, “the strong capital growth indicates the confidence of our investors and helps bolster our bank’s financial strength and stability, further enhancing our ability to absorb shocks and manage risks effectively.”
The bank’s capital adequacy ratio remained robust at 30.6%, far more than the compulsory requirement of 8% set by the regulatory body.
The expansion resulted in a gross profit of 3.77 billion birr, or 36.8%, more than a billion birr gain over the previous fiscal year.
“This robust performance underscores Zemen Bank’s strong performance and effective leadership,” the bank amplified.
The report claims that the rise in profit indicates a 100% success rate in comparison to the fiscal year plan.
Similarly, the stated period’s net profit of 2.4 billion birr is 32% more than the previous year’s amount.
The bank has also seen notable success in terms of deposits, additional loan expansion, and other significant banking activities.
According to the report, the bank’s outstanding deposit balance reached 43.61 billion birr at the end of June 2024. This impressive gain in deposits represented a 17.6 percent increase of 6.53 billion birr over the same time the previous year.
As per the bank’s report, “this growth was the result of relentless effort in resource mobilization managed through moderate expansion of the physical network, reaching 125 branches and 246,287 accountholders,” despite the strict fiscal policy (credit cap imposed by the regulatory body) and the ensuing challenge in resource mobilization.
Due to restrictions on expansion caused by the central bank’s implementation of a credit ceiling, the bank currently owes 35.6 billion birr in outstanding loans and advances. During the fiscal year, Zemen Bank’s loans and advances book growth increased by 13.5% to 4.24 billion birr.
A new loan expansion cannot exceed 14 percent of the prior year, according to the National Bank of Ethiopia’s directive.
One of the bank’s most successful business ventures, forex, mobilized a total of USD 566 million throughout the fiscal year. This is a 7.3 percent increase, or USD 38.5 million, over the previous fiscal year.
With total assets of 59.2 billion birr as of June 30, 2024, the bank’s asset base had grown by 24 percent over the same time the previous year.
This is explained by the increase in loans and advances, which account for 60.2% of the bank’s assets. Deposits with foreign banks and NBE came in second and third, respectively, at 14% and 8.15 percent.
The annual report states, “The bank’s liquidity stood well above the regulatory requirement of 15 percent, reaching 32 percent at the end of June 2023/24, demonstrating the bank’s commitment to prudent liquidity management and a strong liquidity position.”
Zemen Bank was founded in 2008, but its development and performance make it one of the most promising and successful financial companies.