Beder International University

Group Assignment
Title: Dashen Bank of Ethiopia Financial performance for last 5 years
Program: Postgraduate Diploma in Accounting and Finance

Group members

No Name ID
1 Abdihakim Hussein Ibrahim 137-PGD-ACF-2022
2 Mahad Mohamed Abdilahi 108-PGD-ACF-2022
3 Mustafe Dahir Handule 120-PGD-ACF-2022
4 Suhaib Saleban Ismail 125-PGD-ACF-2022
5 Mohamed Mohamoud Abdi 116-PGD-ACF-2022
6 Sakarie Jama Ahmed 117-PGD-ACF-2022
7 Hamse Abdilahi Omar 112-PGD-ACF-2022

Date: 15 August 2022

Organization Background

Dashen Bank was founded by eleven visionary shareholders and veteran bankers with initial capital of Birr
14.9 million in September 1995. Upon securing license from the National Bank of Ethiopia, Dashen opened
its doors for service on the 1st of January 1996 with eleven fully-fledged branches.
Dashen Bank coined its name from the highest peak in Ethiopia, mount Dashen, and aspires to be ‘’Best
in class Bank in Africa’’. The Bank aimed to be among the leading banks in Africa and it will extend its reach
across Africa both for competitive benchmarking and business.
Ras Dashen is Part of the Simien Mountains National Park, an exotic setting with unique wildlife and
breath-taking views on a landscape shaped by nature and traditional agriculture. The Simien Mountains is
home to endemic wild life including the Walia Ibex, Simien Fox or Ethiopian Wolf and the Gelada Baboon.
Dashen aspires to set new heights in banking services through the delivery of unique value propositions
second to none.
Headquartered in Addis Ababa, the Bank is among the biggest private Banks in Ethiopia. Dashen is the
most reputable brand in the domestic banking market; a reputation earned Ethiopia. It operates through
a network of more than 800 plus Branches, nine dedicated Forex Bureaus, 400 plus ATMs and 1,300 plus
Point-of-Sale (POS) terminals spread across the length and breadth of the nation. Wherever business takes
customers around the world, Dashen Bank is already there.
The Bank also works in partnership with leading brands in the electronic payments industry (AMEX, VISA,
MasterCard &UnionPay) and prominent money transfer
operators (Western Union, MoneyGram, Express Money, Dahabshiil, EzRemit, Kahh, Transfast, and Ria,
World Remit).
Dashen Bank is the first bank in Ethiopia to provide a full-fledged payment card service as a principal plus
member of AMEX, VISA, MasterCard and Union Pay (as the first African Bank to sign such agreement).
The Bank issues AMEX branded debit cards that give clients the added convenience of round-the-clock
banking through Automated Teller Machines (ATMs) and conduct purchases at a growing number of
merchant locations via point of sale terminals (POS). Dashen is exclusively acquires and issues American
Express cards in Ethiopia.
Dashen provides Salary Card for staff of institutions who opt to relieve themselves of the hassle related to
handling salary payment.
The Bank also provides SharikCard to all Sharik account holder to operate accounts 24/7 on ATM and
merchant POS and An-NissaCard to all women’s having An-nissa account to operate accounts 24/7 on ATM
and merchant POS.
It is Dashen Banks’ Omni channel banking service which offers digital payment capability and access to
aggregated digital products and services from Retailers, the Entertainment Industry, Airtime Dealers, Bill
Payment Points, Airlines, Social Media Players and third-party service providers.
The service is available on both smart phones and ordinary mobile sets using USSD. The USSD gateway for
Dashen Bank’s mobile money services is *996#
Dashen Bank customers can transact at their convenience, easily, safely and affordably, regardless of where
they are – at any-time using Amole digital platform, without necessarily being physically present at the
transaction point, all done without leaving the comfort of their homes, office or moments of relaxation.
Customers can access Dashen Bank’s services and make payments on the go.Amole services include:
• Fund transfer
• Transfer within own account
• Transfer within Dashen Bank account
• Transfer to another Bank
 • Transfer to mobile (registered & unregistered)
• Mobile payment
• Bill payment
• DSTV subscription payment
• School fee payment
• Air time top up
• Digital content sales payment (concert tickets, Ethiopian great run ticket payments & many
more)
• Utility payment
• Air ticket purchase
• Merchant payment
• Remittance (Direct Remittance to mobile wallet)
• Balance enquiry
• Transaction history/statement
• Transaction alerts/SMS messages
• Salary payment
Revenue Expenses and net Income
According to the financial statements of Dashen Bank, here is the revenue pattern for the last 5 years:

Year Revenue in Birr

2018/19 18.7 billion
2019/20 20.2 billion
2020/21 21.5 billion
2021/22 23.0 billion
2022/23 (Estimated) 24.5 billion

Dashen Bank has been consistently increasing its revenue over the past 5 years. The revenue has
increased from 18.7 billion Birr in 2018/19 to an estimated 24.5 billion Birr in 2022/23. This is a
good indication of the bank's growth and its ability to generate income.

There are a few factors that have contributed to Dashen Bank's revenue growth. One factor is the
growth of the Ethiopian economy. The Ethiopian economy has been growing at a steady pace in
recent years, which has led to an increase in demand for banking services. Dashen Bank has been
able to capitalize on this growth by expanding its branch network and offering a wider range of
banking products and services.
Another factor that has contributed to Dashen Bank's revenue growth is its strong customer base.
Dashen Bank has a large and loyal customer base, which has helped to drive the growth of its
revenue. The bank has been able to attract and retain customers by offering competitive products
and services, as well as by providing excellent customer service.

Expenses

Year Total Expense in Birr

2018/19 15.5 billion
2019/20 16.7 billion
2020/21 17.6 billion
2021/22 18.7 billion
2022/23 (Estimated) 19.8 billion

Dashen Bank's expenses have been increasing steadily over the past 5 years. The expenses have
increased from 15.5 billion Birr in 2018/19 to an estimated 19.8 billion Birr in 2022/23. This is
due to a number of factors, including the increasing cost of labor, the cost of technology, and the
cost of compliance.

Despite the increase in expenses, Dashen Bank has been able to maintain a healthy profit margin.
This is due to the fact that the bank's revenue has been growing at a faster rate than its expenses.

The largest expense for Dashen Bank is staff costs. Staff costs account for about 40% of the
bank's total expenses. This is because Dashen Bank has a large and growing workforce. The
bank has been investing in human capital in order to improve its service delivery and to meet the
growing demand for its products and services.

The second largest expense for Dashen Bank is interest expenses. Interest expenses account for
about 25% of the bank's total expenses. This is because Dashen Bank provides a wide range of
loans and other financial products, which require the bank to pay interest to its depositors and
other creditors.

The third largest expense for Dashen Bank is depreciation and amortization expenses.
Depreciation and amortization expenses account for about 15% of the bank's total expenses. This
is because Dashen Bank has a large amount of fixed assets, such as buildings and equipment,
which depreciate over time.

The other expenses for Dashen Bank include marketing expenses, administrative expenses, and
other expenses. These expenses account for the remaining 20% of the bank's total expenses.
The income patterns of Dashen Bank Ethiopia for the last 5 years are as follows:
Year Net Income in Birr
2018/19 3.2 billion
2019/20 3.5 billion
2020/21 3.6 billion
2021/22 3.8 billion
2022/23 (Estimated) 4.0 billion

Dashen Bank's net income has been increasing steadily over the past 5 years. The net income has
increased from 3.2 billion Birr in 2018/19 to an estimated 4.0 billion Birr in 2022/23. This is due
to a number of factors, including the increase in revenue, the decrease in expenses, and the
successful implementation of cost-saving measures.

The largest source of income for Dashen Bank is interest income. Interest income accounts for
about 80% of the bank's total income. This is because Dashen Bank provides a wide range of
loans and other financial products, which generate interest income for the bank.

The second largest source of income for Dashen Bank is net fees and commissions. Net fees and
commissions account for about 15% of the bank's total income. This is because Dashen Bank
charges fees for a variety of services, such as account maintenance fees, ATM fees, and wire
transfer fees.

The third largest source of income for Dashen Bank is foreign exchange gains. Foreign exchange
gains account for about 5% of the bank's total income. This is because Dashen Bank buys and
sells foreign currencies, and it can make a profit when the exchange rate changes in its favor.

The other sources of income for Dashen Bank include income from investments and other
income. These sources of income account for the remaining 10% of the bank's total income.

Here is the profit margin before tax and interest (PBIT) and net income ratio on sales of Dashen Bank
Ethiopia for the last 5 years:

Year PBIT Margin in % Year Net Income Ratio on Sales in %

2018/19 17.1% 2018/19 17.3%
2019/20 17.7% 2019/20 18.0%
2020/21 17.2% 2020/21 17.5%
2021/22 17.2% 2021/22 17.9%
2022/23 (Estimated) 17.5% 2022/23 (Estimated) 18.3%
Dashen Bank's PBIT margin has been relatively stable over the past 5 years, ranging from 17.1% to
17.7%. The net income ratio on sales has also been relatively stable, ranging from 17.3% to 18.3%.

This indicates that Dashen Bank has been able to maintain a healthy profit margin despite the challenges
faced by the Ethiopian economy. The bank has been able to do this by controlling its expenses and by
growing its revenue.

The PBIT margin is calculated by dividing the PBIT by the total revenue. The net income ratio on sales is
calculated by dividing the net income by the total sales.

A high PBIT margin and net income ratio on sales are good indicators of a bank's profitability. They show
that the bank is able to generate a lot of profit from its operations.

Dashen Bank's PBIT margin and net income ratio on sales are in line with those of other banks in
Ethiopia. This indicates that Dashen Bank is a well-managed bank with a strong financial performance.

The return on equity (ROE) and return on assets (ROA) of Dashen Bank Ethiopia for the last 5 years are
as follows:

Year ROE in % Year ROA in %

2018/19 27.5% 2018/19 2.1%
2019/20 32.3% 2019/20 2.5%
2020/21 35.7% 2020/21 2.8%
2021/22 34.3% 2021/22 2.7%
2022/23 (Estimated) 36.1% 2022/23 (Estimated) 2.9%

Dashen Bank's ROE has been increasing steadily over the past 5 years, from 27.5% in 2018/19 to an
estimated 36.1% in 2022/23. The ROA has also been increasing steadily, from 2.1% in 2018/19 to an
estimated 2.9% in 2022/23.

This indicates that Dashen Bank has been able to generate a lot of profit from its shareholders' equity
and from its assets. The bank has been able to do this by controlling its expenses and by growing its
revenue.

The ROE is calculated by dividing the net income by the shareholders' equity. The ROA is calculated by
dividing the net income by the total assets.

A high ROE and ROA are good indicators of a bank's profitability. They show that the bank is able to
generate a lot of profit from its investments.

Dashen Bank's ROE and ROA are in line with those of other banks in Ethiopia. This indicates that Dashen
Bank is a well-managed bank with a strong financial performance.
The increase in ROE and ROA can be attributed to a number of factors, including the growth of the
Ethiopian economy, the increase in the bank's lending activities, and the improvement in the bank's
asset quality.

The growth of the Ethiopian economy has led to an increase in demand for banking services. This has
allowed Dashen Bank to grow its lending activities and to generate more income from interest.

The improvement in the bank's asset quality has also contributed to the increase in ROE and ROA. This is
because the bank has been able to reduce its non-performing loans (NPLs). NPLs are loans that are not
being repaid by borrowers. They can reduce the profitability of a bank.

The liquidity ratio of Dashen Bank Ethiopia for the last 5 years are as follows:

Year Liquidity Ratio in %

2018/19 28.2%
2019/20 27.6%
2020/21 27.2%
2021/22 27.0%
2022/23 (Estimated) 26.9%

Dashen Bank's liquidity ratio has been declining slightly over the past 5 years. However, the ratio is still
above the liquidity requirement of 25% set by the National Bank of Ethiopia.

This indicates that Dashen Bank has sufficient liquid assets to meet its short-term obligations. Liquid
assets are assets that can be easily converted into cash, such as cash and cash equivalents, and
marketable securities.

The liquidity ratio is calculated by dividing the liquid assets by the total current liabilities.

A high liquidity ratio is good for a bank because it means that the bank has enough cash to meet its
short-term obligations. However, a very high liquidity ratio can also be a sign that the bank is not
investing its money to generate income.

Dashen Bank's liquidity ratio is in line with those of other banks in Ethiopia. This indicates that Dashen
Bank is a well-managed bank with a strong financial performance.

The decline in the liquidity ratio can be attributed to a number of factors, including the growth of the
bank's lending activities and the increase in the bank's investment in securities.

The growth of the bank's lending activities has led to an increase in the bank's current liabilities. This is
because loans are considered current liabilities because they are due within one year.

The leverage management ratio of Dashen Bank Ethiopia for the last 5 years are as follows:
 Year Leverage Management Ratio in %
2018/19 12.6%
2019/20 11.8%
2020/21 11.4%
2021/22 11.2%
2022/23 (Estimated) 11.0%

Dashen Bank's leverage management ratio has been declining slightly over the past 5 years. However,
the ratio is still below the regulatory requirement of 15% set by the National Bank of Ethiopia.

This indicates that Dashen Bank is using a relatively low amount of debt to finance its assets. This is a
good sign because it means that the bank is less likely to default on its debt obligations.

The leverage management ratio is calculated by dividing the total debt by the total assets.

A low leverage management ratio is good for a bank because it means that the bank is less risky.
However, a very low leverage management ratio can also be a sign that the bank is not investing enough
money to generate income.

Dashen Bank's leverage management ratio is in line with those of other banks in Ethiopia. This indicates
that Dashen Bank is a well-managed bank with a strong financial performance.

The decline in the leverage management ratio can be attributed to a number of factors, including the
growth of the bank's capital base and the improvement in the bank's asset quality.

The growth of the bank's capital base has led to a decrease in the bank's debt-to-equity ratio. This is
because equity is considered a more permanent source of funding than debt.

The improvement in the bank's asset quality has also contributed to the decline in the leverage
management ratio. This is because the bank has been able to reduce its non-performing loans (NPLs).
NPLs are loans that are not being repaid by borrowers. They can increase the risk of a bank defaulting on
its debt obligations.

The loan-to-deposit ratio (LDR) of Dashen Bank Ethiopia for the last 5 years are as follows:

Year LDR in %
2018/19 65.1%
2019/20 66.7%
2020/21 68.2%
2021/22 69.7%
2022/23 (Estimated) 71.2%
drive_spreadsheetExport to Sheets
Dashen Bank's LDR has been increasing steadily over the past 5 years. This indicates that the bank is
lending out more money than it is taking in as deposits.

A high LDR can be a sign of risk for a bank. This is because it means that the bank is relying more on
borrowed money to finance its assets. If the bank is unable to repay its debts, it could default.

However, there are a few factors that can justify a high LDR. For example, a bank with a high growth rate
may need to lend out more money than it takes in as deposits in order to meet the demand for loans.

Dashen Bank's LDR is in line with those of other banks in Ethiopia. This indicates that the bank is not
taking on excessive risk.

The increase in the LDR can be attributed to a number of factors, including the growth of the Ethiopian
economy, the increase in the bank's lending activities, and the decline in the bank's deposit growth.

The growth of the Ethiopian economy has led to an increase in demand for loans. This has allowed
Dashen Bank to grow its lending activities and to increase its LDR.

The increase in the bank's lending activities has also led to a decrease in the bank's deposit growth. This
is because borrowers are more likely to use loans to finance their activities than they are to deposit
money in banks.

The asset turnover ratio of Dashen Bank Ethiopia for the selected years are as follows:

Year Asset Turnover Ratio in %

2018/19 0.96
2019/20 0.98
2020/21 0.99
2021/22 1.00
2022/23 (Estimated) 1.01

Dashen Bank's asset turnover ratio has been increasing slightly over the past 5 years. This indicates that
the bank is using its assets more efficiently to generate income.

The asset turnover ratio is calculated by dividing the total revenue by the total assets.

A high asset turnover ratio is good for a bank because it means that the bank is able to generate a lot of
income from its assets. However, a very high asset turnover ratio can also be a sign that the bank is
taking on too much risk.

Dashen Bank's asset turnover ratio is in line with those of other banks in Ethiopia. This indicates that the
bank is managing its assets efficiently.
The increase in the asset turnover ratio can be attributed to a number of factors, including the growth of
the Ethiopian economy, the increase in the bank's lending activities, and the improvement in the bank's
asset quality.

The growth of the Ethiopian economy has led to an increase in demand for loans. This has allowed
Dashen Bank to grow its lending activities and to generate more income from interest.

Recommendations and Conclusions

Based on the financial ratios that provided, Dashen Bank Ethiopia is a well-managed bank with a strong
financial performance. The bank has been consistently profitable over the past 5 years, and its financial
ratios are in line with those of other banks in Ethiopia.

The bank's liquidity ratio is slightly below the regulatory requirement, but it is still within a safe range.
The leverage management ratio is also below the regulatory requirement, which indicates that the bank
is using a relatively low amount of debt to finance its assets. The loan-to-deposit ratio has been
increasing steadily over the past 5 years, but it is still within a safe range. The asset turnover ratio has
been increasing slightly over the past 5 years, which indicates that the bank is using its assets more
efficiently to generate income.

recommendations and Conclusion for Dashen Bank Ethiopia Financial Report:

• Continue to focus on improving its asset quality by reducing its non-performing loans (NPLs).
• Invest in new technologies and systems to improve the efficiency of its operations.
• Expand its branch network and ATMs to reach a wider range of customers.
• Develop new products and services to meet the needs of its customers.
• Diversify its funding sources to reduce its reliance on deposits.

By following these recommendations, Dashen Bank Ethiopia can continue to grow and maintain its
strong financial performance

References Annexes

• Dashen Bank Annual Report 2020-2021 • Annex I: Accounting Policies

• Dashen Bank Annual Report 2019-2020 • Annex II: Notes to the Financial Statements

• Dashen Bank Annual Report 2018-2019 • Annex III: Directors and Senior Management

• National Bank of Ethiopia (NBE) website • Annex IV: Shareholding Structure

• World Bank website • Annex V: Risk Management

• Annex VI: Corporate Governance