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Dashen Bank Profits 729.3 million Br for 2014 / 2015 Fiscal Year

dashen-bankA year of increasing expenses and capital saw Dashen Bank’s profit barely rise and its earnings per share (EPS) plummet from 670 Br to 589 Br in the 2014/15 fiscal year.

The Bank is also organising its growing branches into districts in a new management system intent on decentralization of decision making. Dashen is the first of the private banks to adopt this system.

Dashen, which is among the top five of the biggest private banks in Ethiopia, increased its paid-up capital by 16pc to 1.2 billion Br for the last fiscal year, while it plans a further boost of 25pc or 300 million Br in the current fiscal year, 200 million of which will be from shareholders’ dividends,while a 100 million Br worth of new shares will be sold. Its profit after tax increased by only two per cent to 729.3 million Br. Its EPS has been declining for three years in a row.

Income from loans, advances, central bank’s five-year bonds and other deposits has increased by 24pc to 1.5 billion Br. The investment in central bank five-year bonds has increased by 42pc to 5.8 billion Br, amounting to 23.4pc of total assets and 25.9pc of total liabilities. Its income from service charges and commission has also gone up by 16pc to 589.3 million Br. Foreign exchange dealings were disappointing for Dashen, too, with a seven per cent decline to 299 million Br. Abdulmenan Mohammed Hamza, accounts manager for the Portobello Group Ltd., a London based holding company, attributes the decline to fierce competition in the industry and volatile international trade. Cash in hand for the Bank shows that its foreign currency accumulation as of June 30, 2015 has decreased from 41.1 million Br to 20.4 million Br.

Dashen has been experiencing rising expenses on different fronts. General administrative expenses have increased by 23pc to 369.7 million Br. Salaries and benefits to employees have also increased by 60pc to 501.1 million Br. This expense includes the 24 branches it opened during the year, increasing its reach to 162 throughout the country. The Bank has now 4,200 staff. It also has 220 Automated Teller Machine (ATMs) and 873 Point of Sales (PoS) machines, with plans to buy more in the current year, according to Asfaw Alemu, the Bank’s president.

The increased benefits to employees have helped the bank reduce its turnover, according to Asfaw, although the expert expresses concern that it is an alarming growth. The increase in salaries has undermined Dashen’s performance in provision of profit before tax that was planned to push to one billion Br but actually reached 963 million Br, Teka Asfaw, Board Chairman of Dashen told Fortune.

The Bank has managed to mobilize 19.8 billion Br in deposits, resulting in its interest expense amounting to 667.3 million Br, up by 16pc from the previous year. But the loan to deposit ratio has improved to 57.1pc from 53.3pc.

“There is still a room for further improvement so the management of the Bank needs to push this ratio to 60pc,” commented Abdulmenan.

It has disbursed loans and advances of 11.3 billion Br, up by 20pc; 36.6pc of this went to domestic trade and services, and 24.6pc to the manufacturing sector.

Its cash-and-bank balances have declined by 15pc to 5.5 billion Br. Its liquid assets to total assets ratio has dropped to 22.3pc from 29.7pc and liquid assets to total liabilities ratio has also decreased to 24.7pc from 32.7pc. Its assets have increased by 13pc to 24.7 billion Br.

Dashen Bank has come up with a new structural reform, through which it has began to decentralize power and tasks that used to be undertaken at the head office. For this purpose, it has divided its branches in Addis Abeba among four districts. Each district will be responsible for opening more branches in its area, making loan disbursement decisions to a certain amount, and procuring their stationery materials. Policy design, corporate strategy and approval of letters of credit for import and export will be reserved for the head office, Afaw said.

Given the shortage of human resources in the banking sector, this approach will help to create efficient managers, said Asfaw.

Tags: Ethiopian Banks,, Dashen Bank,, Banks in Ethiopia,, Ethiopian Bank Profit,, Ethiopian Banks 2015 Profit,, Dashen Bank Profit,, Dashen Bank 2014 / 2015 Profit,

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