Chief Executive Officer’s Message

Dear Shareholders,

I would like to extend my cordial greetings to you all!

At the backdrop of last year’s slow global economic recovery, the world continues to face headwinds of various degrees of magnitude struggling to see steady and consistent growth and recovery.

The lingering impacts of the Covid pandemic which somehow got arrested through integrated global efforts and faster vaccine distribution and supply of medical equipment had been so repressive as it severely impacted public health, disrupted business and threatened growth. No wonder it was declared a serious health crisis across all countries of the world. The global growth projections were also markdowns, initially expected at 4.4% in 2022 (WEO) with contractions well in sight for the two largest economies of the US and China. The Russia-Ukraine conflict which broke out early in the first quarter of the year 2022 was no good news for the already wobbling economic recovery. The global impact of the war was immediately felt in sharp rising commodity as well as food prices, particularly wheat given the Black Sea’s undisputed massive share in the world’s produce of the grain.

Surging high flying headline inflation staying in double digits for much of the year and the undesirable socio-economic effects of the war in the north were the two most accountable phenomenons in the domestic scene which posed challenges of various nature. The government’s efforts to combat the unprecedented price increases had so far been largely strategic with several valuable initiatives especially in the agricultural sector starting to return positive results.

The banking sector has continued to expand in terms of the number of participants licensed to join the sector. In addition, unfamiliar visitors such as Ethio-telecom and many other fintechs have also started to join the sector and actively engage in what had so far been sole business of banks. The competition is yet to get stiffer with expected liberalization of the sector to foreign financial services providers including banks. One of the strong moves by the government in the review period was its commitment to bring stock exchange a reality in Ethiopia by providing for the establishment of the Ethiopian Securities Exchange (ESX) following ratification of the proclamation governing the market.

In this year under review, we stayed off the mark across several planned milestones. We strived to significantly scale up business, markedly expand service outlets, and continued to invest in properties through various building construction projects. Our efforts in service outlet expansion helped us raise our branch networks to 373 by the end of the year which, in turn, helped us grow our customer base to close to 1.7 million. Both recorded a feat, respectively, of 30% and 39.2% year-onyear. The Bank’s resource mobilization efforts were once again commendable exhibiting a net deposit growth of well over 35% building on last year’s notable growth. We regret a good number of our branch outlets had not been operational for a sizable period of the fiscal year as a consequence of the war in the northern parts of the country. We were, however, successful in getting these branches refurbished off their sustained damages in the shortest possible time and resume business. Despite the setbacks, our financial results were not deplorable at all as our Bank managed to register a 13% year-on-year growth in profits before tax. The year’s revenue generation which stood at Birr 4.4 billion had been fairly commendable, expanding at 30% year-on-year.

The Bank continued to take part in several Corporate Social Responsibility activities during the year as it spent significant amounts in donations to various recipients. Apart from the Bank’s own efforts in this regard, employees have also played pivotal role in putting together a sizable amount of money in their names to be contributed to humanitarian causes for war displaced victims.

Visualizing current and forthcoming challenges in the broader landscape surrounding the sector, our primary endeavor remains to build resilience and sustainable growth in the years ahead. We are set to launch our new five-year strategic plan development project to enable us find our pathway across the competitive future. Equally important, we would keep an eye on running business and strive to deliver improved customer services across all our product ranges.

The challenges and difficulties we faced over the year could not have been overcome without the indispensable role played by all our stakeholders including the regulatory organ (NBE). We are particularly indebted to our Board of Directors whose guidance and support had been so impactful toward our efforts. We would like to say thank you to our customers to whom we would promise to yet again stay focused on duty and serve them better.

Thank you,

Yehuala Gesesse,

Chief Executive Officer

Abay Bank S.C.