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Which bank is leading the race? The Ethiopian private banking sector has demonstrated remarkable resilience and growth over the past decade. While some banks have emerged as clear leaders, others need to adopt strategic changes to enhance their profitability. Continuous innovation, customer-centric approaches, and strategic investments will be key to sustaining growth in this dynamic sector. ▶️ Top Performers Awash Bank S.C.: Consistently dominated the profitability race, becoming the first private bank to hit the billion-birr after-tax profit mark in FY 2017/18. Dashen Bank S.C.: Despite being outperformed by Abyssinia in recent years, Dashen Bank reclaimed its position, surpassing Abyssinia in profitability in FY 23/24. Bank of Abyssinia: Abyssinia has shown strong performance but lost its lead to Dashen in FY 23/24. ▶️ Consistent Growth Zemen Bank S.C.: Registered steady growth with a 32% profitability increase, matching industry averages. ▶️ Impressive Rebounds Wegagen, Berhan, and Amhara Banks: These banks have rebounded from recent profit slumps, registering impressive profit growth well above the average for private banks. ▶️ Challenges and Stagnation Nib International Bank: Nib's profitability has been significantly impacted by its recent operational issues and management turmoil, resulting in a 36% year-on-year net profit decrease. United Bank: Once one of the best performers, United Bank registered stagnant profit growth in FY 23/24. This comprehensive analysis underscores the dynamic nature of the Ethiopian private banking sector, highlighting the need for continuous adaptation and strategic planning to sustain growth and profitability. Pending Reports Banks such as Cooperatives Bank of Oromia, Oromia International Bank, Bunna Bank, Tseday Bank, Lion Bank, Global Bank, and Enat Bank have yet to release their FY 23/24 reports. As a result, their profitability is not updated in our analysis. #BankingFinance #InvestmentEthiopia #EvopicaMarketInsights

Key insights from National Bank of Ethiopia's 2024 Financial Stability Report ▶️ NBE classifies commercial banks into three categories: large, medium, and small. The state-owned CBE, holding 47.9% of the sector's total assets, is categorised as large. Awash Bank S.C., Bank of Abyssinia, Cooperative Bank of Oromia, Dashen Bank S.C., and Hibret Bank are grouped as medium, while all other private banks are classified as small. ▶️ Despite their growing market share, all private banks are categorized as non-systemically important by NBE. ▶️ The top 10 private borrowers account for 3.5% of total bank loans and advances. ▶️Urban borrowers represent a significant proportion of total bank loans. ▶️58.5% of total sector deposits are held by just 0.4% of depositors, with state-owned enterprises dominating this group. ▶️The sector remains highly sensitive to liquidity risks from sudden withdrawals by large depositors. ▶️The number of banks failing to meet the minimum liquidity requirement under NBE’s stress test increased to 20, up from 18 a year earlier. ▶️Credit risk could rise in the coming year due to ongoing conflicts in some regions. ▶️NBE is closely monitoring banks with liquidity challenges and weaker liquidity risk management practices. ▶️Operational risk in the sector remains significant and is expected to increase further in the short to medium term. ▶️The gross cost of bank fraud and forgeries increased by 30% year-on-year, reaching ETB 1.3 billion in 2023/24. ▶️Fraud cases were reported in almost all banks. Link: https://nbe.gov.et/fsr/ #NBE #Ethiopia #BankingSector #FinancialStability #Evopica

Key Takeaways for Emerging Markets: Reimagining Banking: Traditional banks must adapt to the pressure of digital transformation. Partnering with fintechs can unlock innovation, enhance customer experiences, and serve underserved markets effectively. Spotting Opportunities:  Identify gaps in financial access, particularly among the unbanked and niche markets. Proven technologies like AI, open banking, and embedded finance are catalysts for change. Fostering Partnerships:  Collaboration between governments, banks, and tech firms is critical to building a thriving fintech ecosystem. Strategies for Growth: Partner with fintechs to enhance efficiency and expand outreach. Leverage embedded finance to seamlessly integrate financial services into daily life. Design tailored products for users, prioritising hyper-personalization and mobile-first experiences. Why This Matters: Emerging markets hold a unique advantage: a growing demand for financial inclusion coupled with rapid adoption of mobile and digital technologies. Fintech can bridge the gap for the unbanked, empower SMEs, and create long-term economic impact. With strategic action, Ethiopia and other emerging economies can turn fintech innovation into a force for sustainable development. #Fintech #Innovation #Ethiopia #EmergingMarkets #FinancialInclusion

The Deposit Race: 10 Years of Banking Competition in Ethiopia Awash Bank S.C. leads, closing 2023 with a record 183 billion ETB in deposits, followed closely by Bank of Abyssinia at 159 billion ETB. Dashen Bank S.C. and Cooperative Bank of Oromia are tied at 115 billion ETB. The gap between smaller banks and market leaders underscores the sector's polarisation. What are your thoughts on these trends? Share your perspective in the comments! #Banking #Finance #Ethiopia #Evopica #MarketInsights

Beyond Mergers: Exploring Strategic Alternatives for Ethiopia's Private Banks Ethiopia's banking sector is undergoing significant regulatory changes with the introduction of the new draft Banking Business Proclamation 2024. Among various changes, the draft proclamation introduces provisions for both voluntary and statutory mergers between banks. Ethiopia, with an estimated population of over 120 million and a GDP of approximately USD 150 billion, has a growing economy and a relatively modest banking sector. The country currently has around 30 private banks, which some experts believe is too many for the market size. This has led to calls for consolidation to create fewer, stronger banks capable of competing with foreign banks expected to enter the market. Despite the presence of numerous private banks, a significant portion of Ethiopia's population remains unbanked. According to FSD Ethiopia, only 45% of the population has access to bank accounts, and fewer than 30% of adults save with formal institutions. Access to consumer loans and credit is extremely low. Furthermore, women are disproportionately affected by financial exclusion in Ethiopia, with a significant gender gap in access to banking, saving, and credit services. Evopica's recent research also reveals that private banks allocate only 2% of their loan portfolio to the agricultural sector. This situation presents an opportunity for smaller banks to shift their strategies and address these gaps by: ▶️ Targeting the unbanked population by expanding their reach into rural areas and offering tailored financial products. ▶️ Investing in digital infrastructure and leveraging fintech partnerships, smaller banks can reduce costs and reach more customers. ▶️ Identifying and serving niche markets, such as small and medium-sized enterprises (SMEs), women entrepreneurs, and the agricultural sector, to differentiate themselves from larger competitors. ▶️ Strengthening their capital base through the soon-to-be-launched capital market structure and retaining earnings. Conclusion While the 2024 Banking Business Proclamation opens the door to consolidation through M&A, smaller banks in Ethiopia have other viable pathways to success. By leveraging technology, focusing on niche markets, and addressing critical gaps in financial inclusion, these banks can remain competitive without merging. The experiences of other emerging economies show that independent banks, when strategically focused, can thrive even in challenging environments. M&A is one option—but it is far from the only one. #AgriculturalFinance #EconomicGrowth #Evopica #InvestInAgriculture #EthiopianBanks #BankingInsights #BusinessData #EthiopianEconomy #FinancialAnalysis #InvestInEthiopia #EmergingMarkets #ESX #EthiopianCapitalMarket #DigitalBanking

Market Share Insights: Ethiopian Private Banks Here’s a snapshot of the Ethiopian banking sector’s market share as of June 2023. As we gear up for the release of private banks' financial reports for 2024, this data sets the stage for analysing shifts in market dynamics over the past year. While some major banks have already shared their 2024 financials, others are still pending. Once all reports are in, we’ll release an updated market share chart to spotlight the latest trends. Follow Evopica for the latest updates and in-depth analysis of Ethiopia’s banking industry! #Evopica #EthiopianBanks #Management #Strategy #EthiopianEconomy #FinancialAnalysis #Investment #EmergingMarkets #ESX #EthiopianCapitalMarket #AddisAbaba

ETB 41.3 Billion in Employee Loans Under Scrutiny: The Tax Man Eyes Fringe Benefits In the competitive banking sector, attracting and retaining top talent is crucial for success. Recognising this, private banks in Ethiopia have introduced strategies to position themselves as employers of choice, including offering employee loans at discounted interest rates. In a country where affordable credit is scarce, these low-interest loans provide employees with valuable financial stability and security. Leading Banks in Employee Loans At Evopica, our analysis shows that first- and second-generation private banks have extended a total of ETB 41.3 billion in discounted employee loans, representing around 5% of all loans outstanding as of July 2023. Cooperative Bank of Oromia leads the way with ETB 8.96 billion in employee loans, followed by Awash Bank S.C. and Dashen Bank S.C. In contrast, Addis International Bank and Global Bank have allocated significantly lower amounts to employee loans. Notably, some banks have allocated a substantial portion of their lending to employees. For instance, Cooperative Bank of Oromia allocates around 10.5% of its loan portfolio to employee loans, while Bunna Bank dedicates as much as 12.5% to this purpose. The Tax Implications These benefits have not escaped the attention of tax authorities. Under Ethiopian tax law, fringe benefits, including discounted employee loans, are taxable at a rate capped at 10% of the employee’s monthly salary. Recently, the tax authority has placed renewed focus on this area as a potential revenue source, given that such benefits have historically been under-taxed. Evopica's analysis estimates that the government could collect up to ETB 365 million annually from these benefits, with major collections expected from banks with larger workforces. Income Potential and Lending Decisions Offering low-interest loans to employees involves an opportunity cost. By extending these loans, banks forgo potential income that could otherwise be earned by lending to high-growth sectors. In Ethiopia’s high-interest environment, redirecting a portion of these funds to sectors like Agriculture and manufacturing could contribute to economic development while addressing broader social needs. Balancing Benefits and Compliance Navigating this new regulatory scrutiny requires banks to balance compliance with offering competitive employee benefits. A thoughtful approach will help banks remain attractive employers while possibly reallocating some resources toward vital economic sectors. We’d love to hear your thoughts! As an entrepreneur or professional, how do you think banks should balance employee benefits, regulatory compliance, and lending to critical sectors? Message us or share your views in the comments! #Evopica #EthiopianBanks #BankingInsights #BusinessData #EthiopianEconomy #FinancialAnalysis #InvestInEthiopia #HumanResource #EmergingMarkets #ESX #Ethiopia #CapitalMarket #AddisAbaba

Ethiopian Private Banks Allocate Just 2% (ETB 18.5 Billion) to a Key Sector Agriculture remains the backbone of Ethiopia’s economy, significantly contributing to GDP and providing employment for millions. However, our recent analysis at Evopica reveals that the agriculture sector receives a relatively small portion of the total loans issued by first- and second-generation private banks in Ethiopia. As of 30 June 2023, out of the total ETB 854 billion in outstanding loans, the agriculture sector accounted for only ETB 18.5 billion (2%), showing a modest year-on-year increase from ETB 10 billion in 2022. This highlights a significant disparity when compared to sectors like import-export, domestic trade, and real estate and construction, which collectively accounted to ETB 580 billion in 2023 (68%). Leading the way in agricultural financing are Bank of Abyssinia and Cooperative Bank of Oromia. Conversely, Global Bank, Addis Int’l, and Wegagen Bank provided the least financing to the sector. To unlock the full potential of Ethiopia’s agricultural sector, it is crucial for financial institutions to increase their support. By offering more loans and financial resources, banks can help farmers invest in modern technologies, boost productivity, and contribute to the overall economic growth of the country. Encouraging more agricultural lending also requires innovative policies and products to reduce risks and barriers. Solutions like agricultural insurance, loan guarantees, and government-backed funding could empower banks to invest more effectively in agriculture. Stay tuned for more insights from Evopica as we take a deeper look into sector-wise lending by each private bank. #AgriculturalFinance #EconomicGrowth #Evopica #InvestInAgriculture #EthiopianBanks #BankingInsights #BusinessData #EthiopianEconomy #FinancialAnalysis #InvestInEthiopia #EmergingMarkets #ESX #EthiopianCapitalMarket

Branch Expansion vs. Workforce Efficiency Our latest analysis at Evopica reveals intriguing contrasts in branch network sizes and employee distribution among Ethiopian private banks. -Branch Leaders: Awash Bank S.C. leads the way with the most extensive branch network, followed closely by Bank of Abyssinia and Dashen Bank S.C.. This reach reflects their established presence in Ethiopia’s banking sector and commitment to widespread accessibility. -Workforce Distribution: Tsedey Bank S.C has the highest average number of employees per branch at 24, followed by Awash Bank S.C. at 23 and Dashen Bank S.C. at 21. -Efficiency Models: In contrast, banks like Bank of Abyssinia and Cooperative Bank of Oromia have fewer employees per branch (13 and 11, respectively) despite their large branch networks, possibly signalling an emphasis on operational efficiency. The Impact of Digitalisation As digital banking infrastructure in Ethiopia develops, it could transform these operational models. In countries where mobile banking has become mainstream, banks have reduced branch expansion and workforce needs by offering robust digital services. If Ethiopian banks can adopt similar technologies, they could reduce in-branch workload, optimise operational costs, and enhance convenience for customers. However, the transition to digital banking in Ethiopia faces hurdles, including limited internet penetration and a predominantly cash-based population. For now, Ethiopian banks continue to invest in physical branches and in-branch staff, but the potential for digital transformation is vast and may shape the future of the sector. Stay tuned for more analyses! #EthiopianBanks #BankingInsights #Evopica #BusinessData #EthiopianEconomy #FinancialAnalysis #BankingSector #InvestInEthiopia #EmergingMarkets #ESX #EthiopianCapitalMarket

2023 Average Monthly Compensation Per Employee in Ethiopian Private Banks Our recent analysis at Evopica highlights the average monthly compensation per employee across private banks in Ethiopia. The data reveals significant disparities in employee compensation within the sector, with Bank of Abyssinia leading at 54,000 Birr, while other banks, such as Tsehay, offer 11,000 Birr. This variation reflects different strategic focuses, cost structures, and possibly the banks’ emphasis on attracting talent through competitive wages. Employee Compensation by Generation Established banks from 1st and 2nd Generation with significant market shares, also lead in employee pay. Meanwhile, newer banks (3rd Generation, 2020+) generally offer lower compensation, reflecting their recent entry and smaller market positions. This indicates how a bank’s market presence and maturity influence its ability to offer competitive pay, attract talent, and build a strong workforce. Key figures not shown in the infographic include: Amhara / Abay: 19,000 Birr Siinqee: 16,000 Birr Lion: 14,000 Birr Tsehay: 11,000 Birr Stay tuned for more analyses! #EthioTelecomIPO #InvestInEthiopia #EmergingMarkets #FinancialInsights #Evopica #ESX #EthiopiaFinance #NationalBankOfEthiopia #EthiopianCapitalMarket