Credit Analysis & Portfolio Management

Annex for LAF No WB/CRM/038/2023

1. Applicant’s Basic Information:

Borrower/Applicant: Asmeret Melese Woldegiorgis Date Business Established: 2013 E.C
Branch: Date Credit Relationship Started:
Business Address: Wuhalimat Total Applicant’s Credit Exposure:
Region: AA City/Town: A.A. S.city: Yeka Sister Company’s Credit Exposure: Nil
Wereda: 07 H.No. 452 Credit Exposure Grand Total:
Customer Classification: Previous Credit Risk Grade:
Corporate Current Credit Risk Grade: C
Commercial Risk grade of sister company(s): NA
Reason for change of Grade (in short): -
Ownership: Sole proprietorship Collateral to loan ratio:
Business/Economic Sector: Import Credit Facility Utilization: Poor
Business type/Line: Import of vehicles and spareparts Policy Exception:
Trade License No.: YK/AA/14/672/5776427/2013 Yes No
x x
Renewed up to: 2023 If Yes state
Briefly:_______________________________
___
TIN: 0001299107 PERFORMERS :
Financial Statement: CRM : Henok Tefera
Audited up to: July 07, 2021; July 07, 2022
CA : Dawit Haile
Provisional for:
Credit Approving Committee
Auditor:
CAC –1 CAC –2 CAC –3
x
Opinion: Unqualified Qualified Disclaimer
x x x CAC –4 Loan Workout
x x
As at: 07/07/22
Paid up Capital: 10,000,000.00 Date Application Received:
 By CRM :
Capital Employed: 15,937,000.00
Tangible Net Worth: Birr 15,937,000.00  By CA:

Sales :Birr 45,618,000.00  Date document Completed :-

Operating Profit ratio: 13.3%  Date analysis Completed :

Net profit ratio: 8.7% Decision Date:______________________
Current Ratio: 4.5
Bank Debt/TNW ratio:-
Total liability/TNW ratio: 0.18
Net Profit/Loss: 3,971,000.00
Working Capital Requirement/Birr Sales:

2. Credit Request:

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 Credit Analysis & Portfolio Management
Annex for LAF No WB/CRM/038/2023
The applicant, in its letter dated 16/05/2015 E.C., has requested customs bond guarantees of
Birr 5,810,704.56 and Birr 2,700,000.00 both for a period of Birr 90 days.
3. Purpose of the Request:
Guarantee the unpaid customs bond on imported tyres in favor of Ethiopian Customs
commission.
4. Collateral:
The applicant has pledged to offer the following buildings and machineries as collateral for
the newly requested preshipment facility. These collateral are also held for the outstanding
credit facilities.
4.1. Building
Date
Construction Estimated Estimate Estimate
Collatera Description Value Location Value Value d d by
*Commercial Building owned
by Gebrewahid Alemayehu,
located in Shire town, Kebele
05, Ownership Certificate No. Bereket
186-301-2002 36,272,951.22 4,095,000.00 40,367,951.22 02/12/19 Halefom
* The building is held as collateral for three term loans granted in the name of GABA Sheraro
PLC, GBAS Import Export PLC, and Robel Gebrewahid alemayehu.
Collateral coverage ratio:
Estimated Collateral value ………………………….………….40,367,951.22
Outstanding credit facilities (for which the collateral is held):
GABA Sheraro PLC…………………………………………1,940,431.76
GBAS Import Export Wholesale PLC……………………..14,875,319.33
Robel Gebrewahid Alemayehu………….…………………8,975,320.93
Outstanding loan balance…………………..……….………..25,791,072.02
Newly requested customs bond guarantee……………………8,510,704.56
Outstanding loan balance + Newly requested guarantee….34,301,776.58
Loan to Collateral gap…………………………………………..6,066,174.42
Loan to Collateral ratio……………………………………….. 1.17:1
The collateral pledged by the applicant can fully secure both the outstanding credit facility in the
name of her spouse and the newly requested customs bond guarantee.

5. Management/Owner of the business:

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 Credit Analysis & Portfolio Management
Annex for LAF No WB/CRM/038/2023
5.1. Ownership
Ato Asmeret Melese Woldegiorgis is a businesswoman who has been engaged in the
importing of vehicles and spare parts with a capital of Birrr 10,000,000.00 since 30/06/2013
E.C.
5.2. Management Profile
As per the due diligence from the CRM, the applicant experienced in the line of business.
5.3. Current Business Activities
The applicant is currently engaged in the import of vehicles and spare parts.
6. Credit Exposure:

6.1 With our bank

The applicant has no active credit relationship with Wegagen Bank S.C.
6.2 With Other Banks
As per the credit information generated from NBE’s database center under the enquiry ID No.
1833747 and 1833748 dated 25/01/2023, the applicant and her spouse have credit relationship
with other banks is as follows.
Active Credit facilities with other banks
Borrower Bank Type of Amount/Limit Date Expiry O/S balance Status
facility granted Granted date
Asmeret Melese Awash T/L 12,000,000.00 01/11/22 01/11/25 12,166,849.32 Pass
Asmeret Melese Lion T/L 2,175,000.00 14/04/16 26/03/23 223.04 Pass
Total
14,175,000.00 12,167,072.36

7. Account Performance:
The applicant is a holder of current account and overdraft account at Addis
International Bank S.C. the utilization of which is summarized below.

7.1 CURRENT ACCOUNT utilization at WEGAGEN BANK S.C.

Bank Type of account/Period Highest Credit Credit turnover
Wegagen Bank S.C. Current Account 3,000,020.30 9,635,587.13
10/06/22 -25/01/23

8. Financial Statement Analysis:

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 Credit Analysis & Portfolio Management
Annex for LAF No WB/CRM/038/2023
The applicant has submitted Audited financial statements for the year ended July 2021;
and 2022 (audited by Solomon Demena, which is an authorized auditor). As per results
obtained from the financial spread sheet, the following ratio analysis is carried out:-

Activity Ratio/Year 07/07/21 07/07/22

Net Sales (‘000) 25,395 45,618
Net Sales Gr. Rate (%) 79.63%
Profitability ratio
Net profit ‘’000’’ 1,967 3,971
Operating profit margin 11.81% 13.33%
Net profit margin 7.75% 8.70%
Liquidity Ratio
Current Ratio: 7.23 4.53
Quick Asset Ratio: 4.98 1.62
Leverage Ratio
Tangible Net Worth ‘’000’’ 11,967 15,937
Total Liabilities /TNW 0.16 0.18
 The business has registered an excellent sales performance during the recent one year as
compared with the preceding year.
 The applicant’s business is liquid in that it can cover currently maturing financial
obligations from cash and cash equivalent current assets.
 The company is moderately geared as measured by the debt to equity & debt to asset ratio.
 The company yielded positive profit margin during the past two consecutive years.

9. Request Assessment:
The applicant, in its letter dated 16/05/2015 E.C., has requested customs bond guarantees of
Birr 5,810,704.56 and Birr 2,700,000.00 both for a period of Birr 90 days.

Facts and findings

o The applicant is licensed to engage in the import business.
o The applicant is engaged in a business with sound financial standing.
Asmeret Melese Woldegiorgis Bole Branch January 26, 2023
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 Credit Analysis & Portfolio Management
Annex for LAF No WB/CRM/038/2023
o The applicant’s spouse is a long time customer of our bank both as a borrower and a
depositor.
o The applicant has pledged to offer a building in the name of her spouse which is located
in Shire town. The building is held as collateral for her spouse’s outstanding credit
facilities at our bank and is the very building in which Wegagen Bank opened one of its
branches in Shire town.
o According to the CRM, the pledged collateral which is already registered for
Gebrewahid Alemayehu’s loans cannot be registered for the newly requested guarantee
facility because the appropriate government organ is not rendering registration service
due to the current political situation in the region.
o Taking into account the afore-mentioned analysis, the credit analyst recommends that
the customs bond guarantee shall be issued on the condition that the pledged collateral is
subsequently registered once the appropriate government organ resumes normal operation in the
town.
10. Bases of Recommendation:
Strong points
 The applicant’s business has sound overall financial standing.
 The applicant has acquired sufficient experience in the line of business.
 The applicant’s account utilization at our bank shows that she is a potential depositor.
 The applicant has pledged to offer dependable collateral to secure the loan.
Weak points
 The applicant is new to our bank and we are therefore unable to know her repayment habit.

11. Recommendation of the credit analyst

Based on the foregoing analysis, I recommend granting customs bond guarantees of Birr
5,810,704.56 (Five million eight hundred ten thousand seven hundred four birr and fifty six
cents) and Birr 2,700,000.00 (Two million seven hundred thousand birr) both in favor of

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 Credit Analysis & Portfolio Management
Annex for LAF No WB/CRM/038/2023
Ethiopian Customs Commission for a period of 90 days at the prevailing commission rate on
clean basis.
Condition: -
o Commission income should be fully collected in advance.

Prepared by Reviewed by

_____________ _____________
Dawit Haile Michael H/giorgis
Credit Analyst Manager – Credit Analysis

Asmeret Melese Woldegiorgis Bole Branch January 26, 2023

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