Chief Executive Officer’s Message

Dear Shareholders,

I am delighted to extend my greetings to you all yet again this time when we return to look back at the past year against our Bank’s operational performance results for the fiscal year ended June 30, 2023.

2022/23 had seen several challenges from the global to the domestic macro environments. Adverse developments in the global geopolitics manifested itself in several conflicts. The lingering Russia Ukraine war which burst into the global scene the previous year had become an ongoing world phenomenon. The globe and its inhabitants also had to entertain adverse natural disasters and environ- mental calamities as climate change continued to demonstrate its vocal presence.

The spike in global inflation had generally been easing over the year, albeit still remaining high, owing to both supply as well as demand side disruptions.

IMF reports showed that global growth had been weak as it read 3.5% for 2022 staying well below the historical average of 3.8%. The projections for 2023 keep declining from period to period and the current estimates read 3%.

Growth challenges in Africa also appear to mirror those witnessed at the global stage. Several coun- tries remain weighed down by a series of crises, including the impacts of Russia-Ukraine conflict, soaring commodity prices and food shortages, devastating climate shocks, and debt distress. Real GDP growth in the region slowed down to 3.6% in 2022 from 4.1% in 2021. The projections for 2023 indicate a further decline to 3.1%.

Our country Ethiopia eased into the realm of peace and stability after ending the two-year war in the north courtesy of peace talks brokered by the African Union. Even though the year was one marred by several adverse circumstances, the economic growth exhibited growth of 7.5% put against 6.4% recorded the previous year. In terms of sector wise move- ments, the economy has undergone slight structural shift in the services sector compared to a corre- sponding marginal drop recorded in industry and agriculture sectors.

The banking sector has expanded with the total number of participants reaching 29 including the government owned banks. Despite wide ranging impediments in the domestic scene and beyond, the sector continued to grow across all parameters including value of deposits, capital, expansion of service outlets, and profits.

Our Bank recorded growth across all key parameters in the fiscal year. Value of deposits grew at 29% to reach Birr 41.8 billion by the close of the year. Efforts to expand customer base returned satisfactory results with the total number of clients hitting as high as 2.5 million and growing by 49% up on last year’s position. We have advanced into several locations across the country and opened a total of 110 new branches, the largest number to attain ever in a year since establishment.

Efforts to push the effectiveness of the overall opera- tional frontier through the enhancement of revenues and optimizing costs and expenses through efficient working practices paid off in surpassing new heights in profitability. Profits before tax, thus, reached Birr 2.1 billion for the year exhibiting a growth of 63% against the previous year. Practicing prudent lending as it does, the Bank was able to maintain desirable levels of asset quality well within expected ranges. Pursu- ing our business purpose and upholding our values, Abay has been giving back to communities near and far in various forms of assistance. Spending close to Birr 34.6 million, the Bank has lent its empowering hands to help thousands recover from draught and war torn incidents.

During the review period, our Bank has particularly been engaged in paving a winning way forward for the years ahead by crafting a 5-year strategic plan named “Journey to Greatness.” The new corporate code, developed by in-house capacity supported by an overseas external consultant is set to run from 2023/24 to 2027/28. Following this critical exercise, the Bank was able to undertake all the vital pre-im- plementation tasks readying the entire stage for execution right by the onset of the fiscal year. A key bouncing board was designing a new organization structure in a manner that supports the five year strategy and allows for a leapfrog across processes. Redeployment of staff was also duly finalized followed by a kick-start to one of the Bank’s key strategic initiatives rebranding Abay.

Looking ahead, we remain upbeat despite formida- ble headwinds from the global stage as well as the domestic scene to overcome current and foreseea- ble challenges by exercising due professionalism, and staying focused as well as committed towards our goals. We would exert efforts to our level best and ensure overall results live up to expectations and beyond.

We are grateful to all our stakeholders for our achievements this year. We are particularly indebted to our committed Board of Directors, including those who concluded their terms this year, for their impact- ful and inspiring guidance.

I take this moment to express my appreciation to the entire management team and employees for their hard work and commitment.

Abay’s entire team stands for a round of applause to all our customers as well as shareholders whom we can only repay their exceptional patronage through excellence in all we do. We duly recognize and extend our gratitude for the efforts exerted by all government organs as well as the NBE toward creat- ing a stable and healthy financial sector.


Thank you,

Yehuala Gesesse,

Chief Executive Officer