Ethiopia's second largest private bank, Dashen Bank, has announced profits of 5 billion birr for fiscal 2022/23 - a new record and 31.9% increase over the previous year. The robust results showcase the bank's success in navigating macroeconomic headwinds both within Ethiopia and globally.
Speaking at Dashen's annual general meeting, Board Chairman Dula Mekonnen delved into the challenges faced over the past year. "International disruptions like conflicts slowing global trade created supply issues," he stated. Domestically, high inflation compounded economic stresses as the prices of goods and services rose rapidly. Â
In particular, Dula noted unrelenting inflation tightened credit conditions within the economy. Annual headline inflation exceeded 30% for most of the year, driven by both external price shocks and domestic supply constraints. This pressured businesses and households while limiting Dashen's lending scope.
Additionally, recurrent policy changes from the National Bank of Ethiopia aimed at containing inflation introduced operational complexities for banks. "Constant directives brought higher compliance costs as we adjusted processes multiple times," Dula elaborated.
Navigation of the difficult macro backdrop required strategic agility from Dashen's leadership. The bank diversified its expansion approach through multiple initiatives. On the liabilities side, paid-up capital was raised by 2.5 billion birr - a 36.2% yearly increase that strengthened the balance sheet.
Growing the branch network remained pivotal. According to CEO Asfaw Alemu, 253 new branches opened within a single fiscal year took the total to over 830 across Ethiopia's regions. This reinforced Dashen's nationwide presence and outreach.Â
Digital innovations provided another avenue for resilience. "We witnessed a significant surge in popularity of our virtual channels as customers embraced convenient self-service options," Asfaw noted. Usage of facilities like mobile and internet banking snowballed.
The measures sustained Dashen's positive momentum on assets. Total holdings grew 24.7% to 144.6 billion birr as deposits from individuals and corporations, up 25.9% at 114.8 billion birr, enabled broader lending. Credit quality was maintained through rigorous risk management too, Asfaw said.
For shareholders, the 5 billion birr profit - 31.9% higher than the previous fiscal cycle's 3.78 billion birr - validated these multifaceted strategic interventions. It evidenced Dashen's deft mitigation of macroeconomic volatility through balanced portfolio diversification and astute allocation of resources, according to him.