Chief Executive Officer’s Message

Dear Shareholders,

I am delighted to present to you our Bank’s annual performance report as I walk you through the salient aspects and developments that have happened over the fiscal year.

Over the past fiscal year, the COVID-19 pandemic continued to be the fore running agenda on the global stage as it caused a world-wide health and economic crisis unprecedented in scale and impact.  The world output (GDP) growth had been negative at 3.1% for the fiscal year with all advanced economies as well as emerging markets and developing economies registering a much reduced produce.  Nevertheless, the year had also been regarded as one that has seen the fastest of recoveries ever over quite a long time leading to a growth projection of as high as 5.6% in 2021.  The recovery driven by and largely attributable to the unequal yet steady distribution and access to the vaccine, thus, seems to have concentrated only in few advanced economies while emerging markets and developing economies are lagging way behind.

According to the World Bank Report 2021, COVID-19 had been spreading in the sub-Saharan Africa more slowly than initially expected resulting in less contraction in GDP while growth in agriculture and commodity prices were strong.  In Ethiopia, the pandemic also left it late to spread gradually and inflict the death tolls putting the country among the four most affected countries in Africa (Africa-CDC). No sooner had the 2020/21 fiscal year ended than the third-wave erupted with the spread of the new delta variant which since then claimed quite many lives.  The impacts of the pandemic on the economy had been severe as it crippled business and created a marked slowdown in economic activity.  Unfortunately, the economy had also to suffer from the unavoidable war that our country got into in order to restore law and order in northern region since back in November 2020.  Still, the Ethiopian economy managed to grow by 6.1% in the year under review withstanding stagnation in large economic sectors such as transport, and hotel and tourism.   The annual headline inflation had also been in double-digits throughout the year.  These unfavorable developments, however, couldn’t deter a 20.9% national savings in the reporting period.

The Banking sector seems on the verge of a twofold expansion with as many new banks as those already in operation are under various formation stages to join the industry.  Competitive pressures among participants in the sector as well as policy interventions by the government were instrumental toward the sector’s remarkable performance in resource mobilization.  The sector, thus, continued to register growth in virtually all major parameters such as value of deposits, loans and advances, capital, outlet expansion, as well as profit.

Our Bank also claimed a fair share in the overall industry growth and registered a commendable performance in the reporting period, celebrating its 10th year anniversary with record achievements.

Our branch expansion efforts in the year which resulted in opening of 63 new branches across the country and various other corporate as well as branch level initiatives helped our Bank achieve great results in mobilizing deposits which stood at Birr 23.9 billion by the end of the fiscal year, witnessing a 49% growth year-on-year.  The Bank also continued to finance various economic sectors growing its outstanding loans by Birr 8.4 billion and recording a 72% expansion which put the total amount at Birr 20.1 billon by the close of the fiscal year.  The performance in profits before tax which hit Birr 1.15 billion had, as a result, been an encouraging one with a record 80% year-on-year growth.

Our Bank has also been strengthening its risk management and compliance functions through raising awareness and by successfully running and deploying an advanced AML/CTF system.  In terms of discharging its corporate social responsibility, our Bank has also made marked involvement in several interventions contributing well over Birr 25 million during the fiscal year.

While we concluded a largely fruitful fiscal year in the just ended FY 2020/21, the challenges awaiting us ahead appear quite formidable.   The new fiscal year starts with a yet again another wave of corona virus infection spike aggravated by the new delta-variant.  We also hope that the peace and security of our country would improve and the economy would rebound with better employment opportunities, lessen inflation and trigger savings.  As we navigate through the challenges and harness all opportunities the prevailing environment could possibly offer, we would strive for better results with the help and support of our customers, shareholders, employees and all stakeholders.

I would like to extend my appreciation and gratefulness to all employees and management staff as well as the Board of Directors for their efforts in contributing toward Abay’s achievements.  Needless to mention, our customers have been the strongest source of our success and we shall pay them back with unmatched service they deserve.   I would also like to thank our shareholders, the National Bank of Ethiopia as well as other stakeholders for supporting us undertake our activities.

Thank you,

Yehuala Gesesse,

Chief Executive Officer

Abay Bank S.C.