2013-14 Annual Performance Report Final Version

COMMERCIAL BANK OF ETHIOPIA
1. EXECUTIVE SUMMARY
Global growth picked up in the second half of 2013 and has recorded a 3 percent average growth
during the 2013 fiscal year, being slightly below the expected growth of 3.2 percent. Advanced
economies accounted for much of the pickup, whereas growth in emerging markets increased
only modestly. The latest incoming data, however, suggest a slight moderation in global growth
in the first half of 2014 due mainly to poor weather in the United States, financial market
turbulence and the conflict in Ukraine.
Crude oil prices had depicted slight decreases as compared to the previous year same period,
while coffee prices had depicted successive decline during the months of May and June 2014
after showing recovery for five consecutive months beginning from December 2013 that follows
a declining trend during the first five months of the 2013/14 FY. Food Prices index of June 2014
has depicted a decrease of 2.8 percent compared with that of June 2013, largely as a result of a
marked drop in cereal and edible oil prices, following further improvements in global production
prospects.
The growth in the Ethiopian economy for 2006 EFY1 is expected to continue its previous year’s
momentum [the preceding successive 10 years average growth being 10.9% per annum]. The
inflation rate for the 2013/14 fiscal year stood at 8.1% [Food 5.9%, Non-Food 10.6%], as measured
by the 12 months moving average price index.
The performance levels on key financial resource mobilization targets for the 2013/14 fiscal year
had been encouraging in deposit mobilizations and collections; while the foreign currency
earnings performance level had been somehow below the original plan. The overall performance
results, in brief summary, had been:
Major Accomplishments
 Private and savings deposit mobilizations exceeded targets and previous year annual
incremental amounts;
 Loans and bonds collections had been as per repayment schedules.
Major Shortfalls
 Government, public enterprises and cooperatives deposits had fell short of plan by birr
7.8 billion, 4.9 billion & 121 million, respectively;
 FCY earnings accomplishment reached 92.8% of the original target [Exports: 82.9%;
Remittances: 95.7%].
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Ethiopian Fiscal Year
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Major Areas of Improvement

Areas of Improvement Measures
 Lack of balanced focus on major o Awareness creations through top management
target areas. visits/discussions, workshop and trainings, and
 Gap in clarity towards deposit o Awareness creation and sensitization sessions at district
mobilization strategy and branch levels have been conducted.
implementation action plan.
o Efforts have been made to identify root causes of
 Disparity in performance levels performance gaps, corrective measures taken and scale
of branches and districts. up of best practices underway.
o Technical and Developmental trainings have been

 Shortage of skilled human delivered,
resource. o Coaching and experience sharing sessions had been
underway.
o Close monitoring and coordination by the center have

 Failure to give due attention for been conducted by establishing high level teams at
clearing reconciliation backlogs. CATS process.
Major Challenges:
Challenges Mitigations
Mismatch in the streams of foreign currency o FCY mobilization action plan developed and
resource inflows & outflows. Implementation and follow up had been
underway,
o Performance of the private and saving deposit
have been improved, which helped to somehow
Liquidity challenges in relation to local compensate the underperformance in
currency due to the shortfall in Public cooperatives, public & Gov’t deposits,
Enterprises, Government and Cooperatives o Efforts have been made to minimize the gap
deposits. through bi-weekly fund management activities of
ALCO.
Failure on the side of some institutions to

lodge their credit and FCY requests per o Consultations with these institutions at higher
predetermined schedules (usually they levels have been made.
exceed allocated loan and FCY payment
amounts).
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o Weekly monitoring of E-Payment strategy

Low level of public awareness in using E implementation had been started,
payment products and services. o Aggressive promotions, public education and
providing incentives have been underway.
Mal practices of some banks in the areas of o Consultations with NBE had been ongoing.
exports and FCY cash purchases.
o Consultations with Ethio Telecom had been
Frequent network/ connection failure, ongoing,
Frequent power interruptions. o Generators have been provided for Branches.
o A study has been conducted to maintain CBE’s

stake in Addis Ababa city and actions have been
taken as per the recommendations of the study.
 Workshop/Trainings focusing on corporate
Growing competition in financial resource thinking and service quality have been
mobilization. conducted and would continue in the coming
periods,
 Implementations of the remaining
recommendations of the study would also
continue through the action plan drawn for it.
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Way Forward
To bring about further improvements on the accomplishment levels in targets of the upcoming
2014/15FY, the following points shall be given due focus among others:
1. Resource Mobilization (Deposits and FCY earnings):
 Enhanced focus on deposits mobilization with particular emphasis on those
branches and districts that registered continuous underperformances against
target;
 Conducting an assessment / a study on the root causes of continuous
underperformances against resource mobilization targets of Hawassa,
Nekemte and Wolaita districts and searching for areas of support from center
in this regard;
 Enhanced focus on FCY mobilization through proper implementation of the
FCY mobilization action plan;
 Reviewing the financing procedure of the private manufacturing sector and
establishing criteria for credit allocation,
 Enhanced implementation of the E-Payment Strategy through the weekly
sessions of the E Payment Strategy Steering Committee established around
the close of the fiscal year;
 Conducting aggressive promotion and awareness creation through electronic
and print media.
2. Human Resource:
 Delivery of trainings [developmental; technical and ethical] at all levels to
address the prevailing skill and competency gaps;
 Finalizing individual target setting of the performance management system
and continuing with full-fledged implementation in this regard;
 Enhanced focus on the implementation of the remaining HRD strategies
[Career and Succession Planning and Technical Assistance].
3. Asset Quality:
 Finalizing the suspense and reconciliation backlog clearance and meeting
standards in these regard.
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2. ECONOMIC HIGHLIGHT
2.1 GLOBAL ECONOMY
Global growth picked up in the second half of 2013 and has recorded a 3 percent average growth
during the 2013 fiscal year, being slightly below the expected growth of 3.2 percent. Advanced
economies accounted for much of the pickup, whereas growth in emerging markets increased
only modestly. The latest incoming data, however, suggests a slight moderation in global growth
in the first half of 2014 due mainly to poor weather in the United States, financial market
turbulence and the conflict in Ukraine. Despite the early weakness, growth is expected to pick
up speed as the 2014 fiscal year progresses.
Emerging market economies GDP growth remains higher than the developed economies on
average (4.8 percent), and expected to be lifted up by a strong export. Growth in sub-Saharan
Africa also stood strong at 4.8 percent in 2013, which is virtually unchanged from 2012;
underpinned by improved agricultural production, investment in natural resources and
infrastructure. Better macroeconomic policies and political developments have also played a key
role in sub-Saharan Africa’s growth achievements, in particular in Angola, Burundi, Ethiopia,
Ghana, Mozambique, Rwanda, Sierra Leone, Tanzania, Uganda, and Zambia (ibid).
The OPEC2 reference basket price of crude oil averaged at 106 $/barrel in 2013/14, recording a
slight decrease (of 0.1%) from last year same period of 106.1 $/barrel. Since the start of 2014, crude
oil price volatility has eased, with the range between minimum and maximum daily prices for the
OPEC Reference Basket averaging around $6/b, the lowest since 2003. Upward pressures from
oil supply disruptions in some producing countries and improving growth in many economies
have largely been offset by production increases and cuts in refinery crude runs, which have
weighed on prices. In addition, geopolitical factors have driven prices in both directions (OPEC
monthly oil market report, June 2014).
Coffee prices depicted successive decline during the months of May and June 2014 after showing
recovery for five consecutive months beginning from December 2013 that follows a declining
trend during the first five months of the 2013/14 FY. The ICO3 composite indicator price, however,
stood at 151.9 US cents per pound (lb) in the month of June 2014, reflecting a 29.2% year-on-year
growth from that of June 2013 price. Improvements had been recorded across the four major
coffee groups; of which the Brazilian Natural Arabicas [to which the Ethiopian coffee belongs]
recorded 37.8% growth in the same period. Yet, the 2013/14 annual average ICO composite
2
Organization of Petroleum Exporting Countries
3
International Coffee Organization
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indicator price [130.2 US cents per lb] stood below last year same period average of 137.2 US
cents by 5.1%.
Food Price Index averaged at 206.0 points in June 2014, down nearly 6 points (2.8 percent),
below June 2013 (FAO4 Price Index). The recent month’s decline, which was the third in
succession, was largely the result of a marked drop in cereal and vegetable oil prices, following
further improvements in global production prospects. On the other hand, meat prices held
steady. Cereal Prices index averaged 196.2 points in June, down by 36.2 points (15.6 percent)
below last year same period. The slide was mainly caused by a weakening of wheat and maize
quotations, both of which fell by close to 7 percent, a reflection of a further improvement in
world crop prospects and diminishing concerns over disruption of shipments from Ukraine. By
contrast, rice prices were marginally up from May, mostly reflecting the suspension of large
public stock sales in Thailand.
Edible oil prices averaged 188.9 points in June, down by 4.6 points (2.4 percent) below June 2013.
Quotations for palm oil, the most widely traded edible oil, fell to a 9-month low last month, as
seasonally high output coincided with subdued global import demand. Similarly, soy oil prices
dropped to a 4-year trough on abundant availabilities in South America and anticipation of a
record world soybean production in 2014/15. Prospects of ample sunflower and rapeseed oil
supplies in 2014/15 also weighed on the index.
Sugar Price Index averaged 258 points in June, down 1.2 point (0.5 percent), from May, but still
15.4 points (6.4 percent) up from June 2013. Despite recent month’s marginal decline, the market
remains concerned about the possible effects of a recurring El Niño weather anomaly that could
exacerbate the anticipated fall of global output. Already, indications of below average monsoon
rains are pointing to a possible production shortfall in India, the second largest world sugar
producer after Brazil and top world sugar consumer.
2.2 DOMESTIC ECONOMY

According to the IMF Regional Economic Outlook of April 2014, growth In Ethiopia is set to remain
strong and even accelerate with the help of massive investments in infrastructure and expanded
productive capacity in the energy sector. Preliminary reports have indicated that growth for 2006
EFY is expected to continue its previous year’s momentum [The preceding successive 10 years
growth averaged at 10.9% per annum].
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Food and Agriculture Organization
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The World Bank report also indicated that Ethiopia could potentially reach middle-income status
by 2025 if more emphasis is placed on boosting domestic saving rates, private sector
development and improving the trade logistics. The report further explains that the public sector
development has delivered positive results in the past; and recommended the need for the
development of a strong and vibrant private sector to sustain the high growth.
In an effort to maintain low inflation, a tight monetary and fiscal policy had been implemented
and the measure, aided by domestic production growth and stable international fuel prices,
made consumer price to remain relatively low compared with previous year’s figures. Inflation
had been managed at single digit during all months of the 2013/14 FY; including the 8.5% recorded
in June 2014 [Food 6.2%, Non-Food 11%]—as measured by current versus previous year's similar
month’s country level price index, which is a short term indicator. Looking at the 12 months
moving average price index, the inflation rate for the 2013/14 fiscal year stood at 8.1% [Food 5.9,
Non-Food 10.6].
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3. FINANCIAL PERFORMANCES
3.1. Financial Resource Mobilization
3.1.1. Deposits
3.1.1.1 Incremental Deposits
The incremental private deposit of the bank had reached birr 34.9 billion at the end of the 2013/14
FY, with an accomplishment level of 132.7% against target. The incremental saving deposit had
also reached birr 27.9 billion, exceeding its target by 57% and the previous year same period
incremental savings by more than two fold.
Looking at the total deposit performance of the bank, an incremental amount of birr 38.8 billion
had been mobilized; making 90.2% of the target. The underperformance in this regard had been
mainly due to the underperformances in the government and public enterprises deposits, which
fell below plan by birr 7.8 billion and 4.9 billion birr incremental amounts, respectively.
Table 1: Incremental Deposits

(In millions of Birr)
2013/14 Annual 2012/13 Annual % age Acomp’t Against:
2011/12
Annual Last Year
Particulars Actual Plan Actual Plan
Actual Same Period
(1) (2) (3) (4) (5)=1/2
(5)=1/3
Deposit By Ownership
Private & Individuals 34,904.7 26,298 15,610 19,886 132.7 223.6
PEs & Agencies 3,421.7 8,299 5,755 7,155 41.2 59.5
Cooperatives & Assns. 280.2 401 54 707 69.9 518.9
Sub total 38,606.6 34,998 21,419 27,748 110.3 180.2
Government 184.6 7,998 10,915 7,949 2.3 1.7
Grand total 38,791.2 42,996 32,334 35,697 90.2 120.0
Deposit by Types
Savings 27,877.5 17,756 11,260 10,807 157.0 247.6
Demand (Excldg gov’t) 9,763.2 15,112 8,764 11,194 64.6 111.4
PVT Demand 6,630.4 8,263 3,928 7,416 80.2 168.8
Time 965.7 2,130 1,395 5,747 45.3 69.2
Sub total 38,606.6 34,998 21,419 27,748 110.3 180.2
Government 184.6 7,998 10,915 7,949 2.3 1.7
Grand Total 38,791.2 42,996 32,334 35,697 90.2 120.0
The private and savings deposits, both of which are the major areas of influence, had exceeded
previous year’s same period incremental amounts by birr 19.3 billion and birr 16.6 billion; of which
an incremental amount of birr 9 billion had been contributed by the housing scheme savings
[10/90, 20/80, 40/60 and cooperatives].
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3.1.1.2. Deposits Positions

The total deposit of the bank had reached birr 193.3 billion at the end of the fiscal year under
review, depicting 97.9% target accomplishment level.
The private deposit of the bank had also reached birr 119.9 billion exceeding birr 100 billion
milestone during the fiscal year. This category of deposit had first exceeded birr 50 billion as at
June 30, 2011; which had passed double of its amount within two and half years of time.
Except the private and savings deposits, the remaining deposit categories fell short of
respective targets in varying amounts.
Table 2: Deposit Positions

(In Millions of Birr)
Accomplishment Levels
June 30, 2014 Actual Positions
(% age) against:
Particulars June 30, June 30, Jun30, Jun30,
Actual Plan Plan
2013 2012 2013 2012
(1) (2) (5)=1/2
(3) (4) (6)=1/3 (7)=1/4
Deposits by Ownership:
Private 119,862 111,256 84,958 69,347 107.7 141.1 172.8
PEs & Agencies. 30,163 35,040 26,741 20,986 86.1 112.8 143.7
Coop. & Ass. 4,153 4,273 3,873 3,819 97.2 107.2 108.7
Sub Total 154,178 150,569 115,572 94,152 102.4 133.4 163.8
Government 39,142 46,956 38,957 28,043 83.4 100.5 139.6
Grand Total 193,320 197,525 154,529 122,195 97.9 125.1 158.2
Deposits by Types:
Savings 81,041 70,919 53,164 41,903 114.3 152.4 193.4
Demand (Excldg Gov) 63,466 68,815 53,703 44,939 92.2 118.2 141.2
PVT Demand 37,798 39,431 31,168 27,239 95.9 121.3 138.8
Time 9,671 10,835 8,705 7,310 89.3 111.1 132.3
Sub Total 154,179 150,569 115,572 94,152 102.4 133.4 163.8
Government 39,142 46,956 38,957 28,043 83.4 100.5 139.6
Grand Total 193,320 197,525 154,529 122,195 97.9 125.1 158.2
3.1.1.3. District Level Performances in Deposit Mobilization

Districts performances in deposits mobilizations depicts that six districts [North, East, B/Dar
Dessie, South and Gondar] had registered encouraging performances exceeding their respective
incremental private and saving deposits targets.
The remaining nine districts fell short of private deposit incremental targets in varying amounts,
among which, two of them (Nekemte and Wolayta) had fallen below 50% target accomplishment
level.
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The incremental saving deposit performance of districts had also been encouraging with seven
districts exceeding respective targets, and others six depicting above 50% accomplishments. The
remaining two districts [D/Dawa and Hawassa] had fallen below 50% as depicted in the table
below.
Table3: Incremental Deposits by Districts

INCREMENTAL PRIVATE DEPOSITS INCREMENTAL SAVINGS DEPOSITS
2013/14 Annual 2012/13 2013/14 Annual 2012/13
Acmp’t (In %) Acmp’t (In %)
Annual Annual
DISTRCT Actual Plan DISTRCT Actual Plan
Actual Actual
(1) (2) (4)=1/2 (5)=1/3 (1) (2) (4)=1/2 (5)=1/3
(3) (3)
NORTH A. 8,787.8 5,000.0 154.0 175.8 5,706.4 NORTH A. 6,471.4 2,849.0 106.0 227.1 6,105.1
EAST A. 5,120.3 3,500.0 2,226.0 146.3 230.0 EAST A. 4,464.1 2,027.0 1,509.0 220.2 295.8
B/DAR 1,825.4 1,400.0 546.0 130.4 334.3 SOUTH A. 3,899.8 2,309.0 2,025.0 168.9 192.6
DESSIE 1,563.9 1,200.0 1,132.0 130.3 138.2 WEST A. 2,513.3 1,624.0 1,161.0 154.8 216.5
SOUTH A. 4,520.3 3,500.0 1,704.0 129.2 265.3 B/DAR 1,540.2 1,052.0 508.0 146.4 303.2
GONDAR 1,210.8 1,000.0 566.0 121.1 213.9 DESSIE 1,300.0 1,094.0 929.0 118.8 139.9
MEKELLE 1,650.4 1,800.0 1,319.0 91.7 125.1 GONDAR 1,054.7 934.0 450.0 112.9 234.4
JIMMA 1,061.8 1,200.0 515.0 88.5 206.2 MEKELLE 1,347.9 1,461.0 1,231.0 92.3 109.5
ADAMA 1,210.0 1,400.0 687.0 86.4 176.1 ADAMA 920.2 1,041.0 621.0 88.4 148.2
WEST A. 2,303.6 3,000.0 1,489.0 76.8 154.7 JIMMA 677.6 936.0 453.0 72.4 149.6
SHASHE. 763.8 1,000.0 550.0 76.4 138.9 NEKEMTE 516.6 764.0 275.0 67.6 187.9
D/DAWA 1,064.0 1,400.0 1,107.0 76.0 96.1 SHASHE. 538.9 808.0 394.0 66.7 136.8
HAWASA 765.3 1,400.0 761.0 54.7 100.6 WOLITA 435.9 820.0 413.0 53.2 105.5
NEKEMTE 540.4 1,100.0 353.0 49.1 153.1 D/DAWA 438.1 1,083.0 580.0 40.5 75.5
WOLAITA 364.4 1,000.0 485.0 36.4 75.1 HAWASA 373.5 959.0 509.0 38.9 73.4
TS NR/NT 2,160.2 1,000.0 2,009.0 216.0 107.5 TS NR/NT 1,393.4 117.0 88.0 1,190.9 1,583.4
CPCs (7.8) - 7.0 (111.4) CPCs (7.8) - 8.0 (97.5)
TOTAL 34,904.7 29,900.0 15,610.0 116.7 223.6 TOTAL 27,877.5 19,877.0 11,260.0 140.3 247.6
3.1.1.4. Major Initiatives taken

To enhance the deposit mobilization performance of districts and branches various initiatives
had been taken from center among which the following had been the major ones:
A. Top Management Discussions/Trainings
During the 1st quarter of the 2013/14 fiscal year, performance enhancement visits and trainings
had been conducted by top management members of the bank in all districts and selected
branches under their domain. During the 3rd quarter, a 2nd round performance enhancement
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discussions and workshop had been conducted in eight districts and their respective
underperforming branches. The major objectives had been to:
 Discuss on key targets of the year with employees and to reach at common
understanding;
 Encourage employees to achieve their targets;
 Have discussion with employees on implementation of the deposit mobilization strategy
of the bank and related issues;
 Evaluate customer service excellence level of branches; and
 Provide training to branch managers and district staff on implementation of the deposit
mobilization strategy.
The discussion and training programs had helped the bank to brainstorm on weaknesses,
identify challenges, share experiences and discuss on way forward to address weaknesses and
challenges both at branches and districts and head office levels.
B. Identifying Root Causes for Performance Gaps
During the 2nd quarter of the fiscal year, an onsite discussion had been conducted by some
members of the process council, taking Dessie district from the best performers and Hawassa
district from least performers to have a comparative view on the root causes of the performance
disparity among districts.
The comparative analysis included discussions with major players in both districts – the district
management team, the management team of selected major branches, leadership of the
regional administrative offices, selected premium customers and the leadership of the
microfinance offices of both districts.
The findings indicate that the main difference among districts lies on tasks accomplished in
relation to the attitude and capacity of the leadership team. Dessie district had taken bold
decisions and measures to ensure whether the capacity and attitude of the district team, branch
managers and customer service managers goes in line with the recent business expectations that
the bank sets for districts [demoting and transferring those which the district believes incapable
in this regard]; which on the other hand had been a gap in Hawassa district. Furthermore, the
following issues had been areas of difference among the two districts, which are believed to have
contribution towards the performance differences:
1. Weaknesses in looking inwards for identifying weaknesses and working towards

improvements, externalizing the causes of performance failure;
2. Weaknesses in environmental scanning, planning, and regular performance
monitoring and provision of feedback on resource mobilization;
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3. Recognizing efforts and activities instead of results on performance discussions;

4. Weaknesses in exploiting relationships with regional administrative offices for
business results [enhancement of savings].
The analysis had been serving as best practice scale up document in all districts together with an
action plan to improve problem areas in this regard.
C. Improving the Performance Disparity among Districts/Branches
Looking into the performance disparity among the districts and corresponding branches, the
Board of Directors had given a direction during the performance review meeting of the half year
of 2013/14 FY, so as the top management shall focus on reducing this disparity, and minimizing
lost financial opportunities in this regard. Accordingly, priority focus had been given to those
districts at which the district level target hadn’t been achieved and the predominant number of
the branches had registered negative performance levels and below 50% target accomplishments
as depicted in the table below.
Table 4: Branches Performances in Private Deposit as at Dec 31, 2013
Existing Accomplishment levels: Below June 30, 2013

Branches
DISTRCT Amount Below
[Excluding In
new] > 100 % 50% - 99 % < 50% June 30, 2013
Number
[In Millions of birr]
HAWASA 46 5 8 11 22 (249.4)
WOLAITA 52 10 13 15 14 (86.7)
NEKEMTE 46 6 9 19 12 (107.5)
JIMMA 40 13 12 8 7 (26.7)
B/DAR 48 24 9 8 7 (152.4)
D/DAWA 56 12 17 19 8 (357.5)
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MEKELLE 55 26 14 8 7 (82.1)
WEST A. 46 16 12 13 5 (115.6)
GONDAR 34 22 7 2 3 (8.4)
SHASHE. 35 10 11 11 3 (161.2)
SOUTH A. 39 26 6 4 3 (161.2)
NORTH A. 58 24 13 17 4 (45.5)
DESSIE 43 33 3 5 2 (15.6)
EAST A. 50 34 8 6 2 (34.3)
ADAMA 47 12 22 11 1 (19.4)
TOTAL 695 273 165 157 100 (1,470)
Focusing on those 157 branches which had been below 50% target accomplishment and those 100
branches with negative performance levels, discussions in nine districts [in the branches
premises] had been conducted by top management members for a duration of around nine days;
to work out as to how these branches would bring about performance improvements during the
remaining periods. In addition, a one day workshop had been conducted for the management of
these underperforming branches [based on the results of discussions made and weaknesses
identified during visits made at branches level] on how to fix the gaps during the remaining
months and bring about performance improvements accordingly.
The major findings on the discussion with the management, deposit mobilization teams and staff
of these branches had been the following:
 Weaknesses in properly developing branch level deposit mobilization action plan of

the fiscal year by taking into account environmental contexts and potential; instead,
most of the action plans had been drawn just for compliance;
 Weaknesses in governing the deposit mobilization tasks in accordance with the
elements of the branch level action plan – the daily deposit mobilization tasks had
been run without referring into it;
 Weaknesses in close monitoring of periodic [daily, weekly, monthly] branch level
efforts against the action plan targets and results;
 Inconsistent branch level deposit mobilization team structures; some teams have too
many members, some other teams hadn’t been led with appropriate staff, etc;
 Weaknesses in exploiting relationships with regional administrative offices and other
stakeholders for enhancement of savings, etc.
The branches had hence been provided a highlight on components of an action plan with
practical reference on the corporate deposit mobilization strategy action plan of the year with
subsequent group discussion and presentations on selected sample branches action plans
among themselves; so as to enable them review their respective implementation plan of the
fourth quarter.
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The recent performance level of these branches had depicted improvements in that the number
of branches with negative performance levels had been reduced to 24 (from 100) as at Jun 30,
2014.
Table 5: Branches Performances in Private Deposit as at June 30, 2014
Existing
June 30, 2014 Below June 30, 2013
Branches Accomplishment levels:
DISTRCT Amount Below
[Excluding In
new] > 100 % 50% - 99 % < 50% June 30, 2013
Number
[In Millions of birr]
East 50 34 14 1 1 (22.3)
Dessie 43 29 10 3 1 (8.4)
South 39 23 12 3 1 (96.9)
B/dar 48 27 18 3
Gondar 34 18 14 2
North 58 22 23 13
West 46 13 18 14 1 (6.2)
Adama 47 11 29 5 1 (9.5)
Shashem. 35 8 14 13
Jimma 40 9 21 10
Mekele 55 12 26 14 3 (20.6)
Nekemte 46 6 11 27 2 (22.7)
D/D 56 7 30 14 5 (158.6)
Hawasa 46 1 14 29 2 (68.0)
Wolyta 52 1 15 29 7 (38.5)
Total 695 221 269 180 24 (451.7)
D. Framework for Resource Mobilization Teams

Subsequent to the implementation of the deposit mobilization strategy, districts and branches
had formed virtual teams that monitor, evaluate and facilitate the resource mobilization tasks.
However, the composition of team members, the major functions and responsibilities of those
teams as well as their effectiveness greatly differ among districts and branches.
During the 2013/14 fiscal year, accordingly, a framework for resource mobilization teams had
been developed and implemented with the aim of standardizing the resource mobilization team
structures. The framework had focused on standardizing:
The composition and membership of the resource mobilization teams at district offices and
branches;
The meeting schedules and the major deliberations of the teams;
The duties and responsibilities of the chairpersons and the members of the teams;
The critical success factors of the teams; and
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The relationships of these teams with the corporate Deposit and FCY review steering
committees, etc.
E. CBE’s Stake Analysis in Addis Ababa City

An assessment had been conducted as to how to maintain the stake of CBE in Addis Ababa city
branches, and this assessment has come-up with six areas of improvement [corporate thinking,
leadership, service excellence, competitor’s analysis, best practices, and the idea behind money
tracking] that are believed to contribute for the enhancement of the bank’s business in this area.
Accordingly a workshop for all Addis Ababa city branch managers and Grade 3 and 4 branches’
customer service managers had been conducted for two consecutive days in eight groups in the
month of May 2014 so as to have a shared understanding on the recommendations of the
assessment report.
The major objectives of the workshop had mainly been to discuss on major manifestations of the
existence/non-existence of corporate thinking in branches daily operation and on problems of
unfairly competing with each other [between branches of CBE] rather than creating harmony
within ourselves and competing with other banks in the industry. The workshop had also focused
on the gaps manifested on the remaining five areas of improvement. The major gaps identified,
for which an action plan had been drawn for implementation had been:
 Poor handling of inter branch transactions – “giving less attention to other branch
customers”;
 Customer snatching among CBE Branches;
 Recklessly saying “there is no cash” to customers – fear of cash shortage for “their branch
customers”
 Delay in approving/authorizing payments during reporting period;
 Giving less attention to non-financial targets such as e-banking and customer base
expansion;
 Unappealing and non-uniform office layout among branches;
 Less reliable ATM services particularly on weekends and holidays;
 Frequent breakdown of critical operational office equipments (counting machines,
copiers and printers, etc).
F. New Products & Services

An amount of birr 191.1 million deposits had been collected from the interest free banking (IFB)
window services that the bank had launched around the beginning of the second quarter of the
2013/14 FY. The amount to date hadn’t been that much significant since the service had been new
to the industry, indicating that it needs extensive awareness creation and promotion so as to
15
exploit the huge resource of the society segment that do not want the receipt/payment of
interest in the course of doing business.
Table 6: IFB Windows service Deposits

(In 000 Br)
Actual Positions Actual Positions Actual Positions
as at Jun 30, 2014 as at Mar 31, 2014 as at Dec 31, 2013
Type of Deposit
No of Deposit No of Deposit No of Deposit
Accts opened Balance Accts opened Balance Accts opened Balance
Quard (Demand) 372 55,916 244 10,175 193 10,043
Mudarabah (Saving) 1,126 25,031 862 17,889 595 13,526
Amana (Safe Keeping) 8,544 110,186 3,313 37,869 1,681 20,208
Total 10,042 191,133 4,419 65,932 2,469 43,777
In addition, youth savings accounts [for those between 18-24 years of age] and youth teen
savings accounts [for those between 14 - 17 years of age] had been introduced at the beginning
of December 2013, of which birr 83.5 million deposits had been mobilized until the end of 2013/14
fiscal year.
The women saving accounts [launched on March 08, 2014] had also depicted encouraging move
enabling the bank to mobilize birr 551.2 million deposits through more than 67 thousand new
deposit accounts opened in less than four months.
Table 7: Youth and Women Saving Accounts

(In 000 Br)
Actual Positions Actual Positions Actual Positions
as at Jun 30, 2014 as at Mar 31, 2014 as at Dec 31, 2013
Type of Product
No of Deposit No of Deposit No of Deposit
Accts Balance Accts Balance Accts Balance
Youth Saving Account 48,180 70,881 16,911 21,087 717 1,094
Youth Teen Saving Account 22,049 12,633 9,778 4,520 424 223
16
Youth Savings Total 70,229 83,515 26,689 25,607 1,141 1.300

Women Saving Account 67,069 551,217 9,007 68,673 - -
Total 137,298 634,731 35,696 94,280 1,141 1.317
G. Customer Base Expansion

The total deposit customer base at the end of the fiscal year reached 8.2 million in number of
accounts, depicting an increment of 2.1 million deposit accounts during the 2013/14 fiscal year.
The number of net deposit accounts opened had exceeded the annual target of two million;
though it somehow fell below the previous year net increase of 2.2 million accounts.
Table 8: Deposits Customer Base Expansion

(In number of deposit accounts)
Total Number of Deposit 2013/14 Annual
Accounts Position Net Account Increases Last Yr
Districts Actual
Jun 30, 2014 June 30, 2013 Actual Districts Acmp’t
Increment
(1) (2) (3)=1-2 Target* Level
Wolaita 413,457 264,810 148,647 182,502 120.5 84,761
Gondar 365,590 220,922 144,668 181,887 117.7 84,638
B/Dar 502,468 344,775 157,693 201,468 115.8 106,290
East A. 733,680 564,352 169,328 229,487 109.2 279,585
Jimma 408,830 277,617 131,213 179,724 108.0 87,775
D/Dawa 479,172 337,940 141,232 198,879 105.1 107,768
South A. 881,581 723,968 157,613 227,232 102.6 310,025
Hawassa 454,698 321,348 133,350 195,242 101.1 110,312
West A. 782,080 635,207 146,873 215,801 100.7 284,163
Mekelle 550,509 414,325 136,184 201,818 99.9 108,147
Nekemte 354,021 245,128 108,893 168,891 95.4 77,604
Shash. 341,060 239,422 101,638 158,120 95.1 68,267
North A. 1,052,649 881,563 171,086 266,329 95.1 347,757
Adama 386,783 280,724 106,059 181,409 86.5 59,030
Dessie 385,320 286,281 99,039 170,971 85.7 98,904
TS & CPCs 95,091 76,445 18,646 - - 7,170
CBE 8,186,989 6,114,827 2,072,162 2,000,000 103.6 2,222,196
17
3.1.2. FCY Earnings

The total foreign currency inflow during the 2013/14FY [excluding purchase from NBE] had
reached USD 5.5 billion, depicting accomplishment levels of 92.8% and 115% against original target
and previous year same period actual, respectively. Looking at earnings by category, all FCY
earnings categories had fell short of respective original targets except FCY purchase and service
receipts.
As compared with the revised NBE plan however, export earnings performance of the bank had
reached 97.6 percent while remittances and total inflow reached 110.7 and 107.8 percentage
accomplishment levels, respectively.
Table 9: Foreign Currency Receipts

(In Millions of USD)
2013/14 Annual Acmp’t Levels Against:
Last Year S.
Original Original Revised
Particulars Actual Revised NBE Period Last Yr
Target Plan NBE
1 Plan 3 5 = 1/3
2 4=1/2 Plan
1.Exports 1,126.1 1,358.0 1,153.5 1,071.0 82.9 97.6 105.1
2.Remittances 4,406.0 4,604.5 3,979.8 3,740.9 95.7 110.7 117.8
FCY Purchases 416.8 318.0 350.9 318.1 131.1 118.8 131.0
Service Receipts 1,478.0 1,357.0 1,009.1 1,323.2 108.9 146.5 111.7
Private Transfers 1,852.3 2,201.0 1,967.6 1,600.1 84.2 94.1 115.8
Official Transfers 658.9 728.5 652.2 499.5 90.4 101.0 131.9
Total Inflows [1+2] 5,532.1 5,962.5 5,133.3 4,811.9 92.8 107.8 115.0
3. Purchase from NBE 1,259.5 888.2 960.2 1,547.7 141.8 131.2 134.3
Available FCY [1+2+3+4] 6,791.6 6,850.7 6,093.5 6,266.5 99.1 111.5 108.4
The performance gap in FCY earnings during the first four months [July – October 2013] of the
2013/14 budget year had been 25% as seen against the target; whereas the shortfalls in export,
SWIFT private transfer and FCY cash purchases had been significant that time [41%, 42% and 60%
decline against corresponding targets respectively]. To fill these gap and realize the FCY earnings
target of the 2013/14FY, the bank had drawn an action plan which had been under
implementation from November 2013 onwards.
The major initiatives developed on the FCY mobilization action plan, which had been the basis for
the detailed tasks to be accomplished were the following:
 Undertaking aggressive promotion and awareness creation;

 Strengthening relationship marketing;
 Expanding network and product channels;
18
 Enhancing service efficiency; and

 Attracting the Diaspora towards formal remittance channels.
The summary of major actions taken as per the FCY earnings action plan during the months
November 2013 – June 2014 had been:
 Follow up on export customers against individual exporters monthly plan and strengthening
relationships in this regard;
 Delivery of trainings and awareness creation discussions for all frontline staff, branch
managers, customer service managers, district operation support managers and system
administrators on FCY services;
 Ensuring the availability of the major Money Transfer Organizations [MTOs] services on at
least 700 branches – which resulted provision of the services on additional 122 branches
[Western Union], 146 branches [Bole Atlantic], 197 branches [Xpress], 409 branches
[Dahabshill], and 184 branches [Money Gram];
 Dedication of additional 407 windows for FCY service provision in all branches;
 Conducting discussions with major exporters, MTOs and remittance recipients and taking
feedbacks in this regard;
 Aggressive promotions on SWIFT and major foreign remittance services on local and
international electronic media [EBS];
 Striving to bring about service excellence in both export & remittances; etc.
Further detailed action plan implementation performances had been attached in appendix 2.
To continuously track improvements and mitigate challenges and weaknesses, performance

reviews had been conducted weekly by a steering committee at corporate level on both the
action plan implementation and the FCY earnings status. The year to date performance levels
depicted in the table hereunder reveal that performance improvements had been observed in
almost all major FCY earning categories as compared against the July – October 2013 baseline
performance – which stands for the period before the commencement of the FCY action plan
implementation.
However, the performance levels in exports [particularly coffee] and SWIFT private transfers had
still been far below respective corresponding targets, which made the overall FCY earning
performance fell short of target.
19
Table 10: Foreign Currency Receipts

2013/14 Annual July – Oct. 2013 [Baseline]
No. Particulars Original Acmp. Acmp.
Actual Plan Actual
Plan % %
1 Exports 1,357.8 1,126.1 82.9 497.6 293.4 59.0
Coffee 411.9 214.0 52.0 122.7 80.3 65.4
Leather & its Products 110.1 88.2 80.1 51.3 28.9 56.3
Gold 147.3 135.8 92.2 69.5 40.8 58.7
Oil Seeds 568.6 460.6 81.0 145.3 77.2 53.1
Others 232.6 227.5 97.8 108.8 66.2 60.8
2 Remittances 4,604.6 4,406.0 95.7 1,512.9 1,215.3 80.3
2.1 Private Transfer 2,201.0 1,852.3 84.2 530.4 663.8 79.9
Western Union 473.0 483.3 102.2 135.3 155.2 114.7
Express 156.1 170.5 109.2 39.3 53.1 135.1
Atlantic 85.4 90.4 105.9 29.6 21.0 70.9
Money Gram 49.4 49.3 99.8 9.6 15.4 160.4
Dahabshil 24.9 18.8 75.5 4.2 2.9 69.0
Global Currency 127.2 92.3 72.6 26.3 38.2 145.2
Others 11.6 16.3 140.5 4.5 2.2 48.9
Total from MTOs 927.6 921.0 99.3 288.0 248.8 115.8
Pvt Trans. via SWIFT 1,273.4 931.3 73.1 415.0 242.4 58.4
2.2 Official Transfer 728.5 658.9 90.4 164.6 217.2 132.0
WFP 121.0 88.3 73.0 29.3 40.7 138.9
UNDP 70.0 52.9 75.6 22.7 14 61.7
UNICEF 88.1 70.8 80.4 30.6 24.1 78.8
Others 449.4 446.9 99.4 82 138.4 168.8
2.3 Service Receipt 1,357.0 1,478.0 108.9 545.6 411.8 75.5
Airlines 163.1 227.4 139.4 62.7 44.1 70.3
EEPCO 54.0 25.1 46.5 10.6 14 132.1
TELECOM 130.2 124.7 95.8 36.0 42.2 117.2
Embassies & Others 1,009.7 1,100.8 109.0 436.3 311.5 71.4
2.4 FCY Purchase 318.0 416.8 131.1 138.9 55.9 40.2
3 Total Inflows (1+2) 5,962.6 5,532.0 92.8 2,010.5 1,508.7 75.0
3.1.2.1. FCY Earnings Market Share

As depicted in table 11 below, the overall FCY earnings market share of CBE for the eleven months
period of the budget year 2013/14 reached 69.1%, with improvements from the market share as
at September 30, 2013 in both exports and remittances.
Table 11: Eleven Months Foreign Currency Earning Market Share

(In millions USD)
CBE 1stEleven 11 Months National 11 months CBE 1st Quarter
Items Months 2013/14 FCY Level Foreign Market Share CBE Market
Earning Currency Earning (in %) Share in %)
Total FCY Earnings 4,790.4 6,928.3 69.1 54.2
1. Export 1,036 1,805.1 57.4 42.1
2. Remittance 3,754.4 5,123.2 73.3 59.2
2.1. Private Transfer 1,673.4 2,643.6 63.3 -
2.2. Official Transfer 640.4 873.5 73.3 -
2.3. Service Receipt 1,440.6 1,606.1 89.7 -
Source: NBE Eleven months 2013/14 Data
20
3.1.3. Collections
The overall collections of the fiscal year under review reached birr 38.2 billion, which had been
above the predetermined amount by birr 2.2 billion (6.1%). The collection schedules from majority
of the institutions had been realized in excess of the predetermined amounts; while the
repayments from edible oil imports [MEWIT], wheat sales [EGTE] and sugar sales had depicted
major shortfalls.
The amount collected from fertilizer and input loans had been in excess of the predetermined
amount which had conservatively been set for cash flow purposes, though huge repayments of
birr 4.2 billion [fertilizer and input loans disbursed on 2003/04 and 2004/05 EFY] still had to be
collected.
Table 12: Collections

(In Millions of Br)
2013/14 Annual Variation
Particulars
Actual Plan Absolute %age
Private sector Loans 5,917.7 4,254.4 1,663.3 39.1
Fertilizer and other Input 10,651.6 7,805.1 2,846.5 36.5
Sugar Sales (Sugar Corporation) 1,457.2 2,359.4 (902.2) (38.2)
Other Public Enterprises 4,073.6 3,081.3 992.3 32.2
EEPCO 4,092.0 3,696.5 395.5 10.7
DBE 689.3 700.0 (10.7) (1.5)
A.A. Housing Projects Bonds* 420.9 515.8 (94.9) (18.4)
Regional Housing Project Bonds* 256.6 117.5 139.1 118.4
Government Bonds 856.7 293.2 563.5 192.2
Wheat Sales(EGTE) 2,500.0 3,858.8 (1,358.8) (35.2)
Edible oil (MEWIT) 7,282.8 9,318.0 (2,035.2) (21.8)
Total Collections 38,198.4 36,000.0 2,198.4 6.1
* The actual total collection from the AA and regional housing projects had been 2,104.4 & 1,282.8 million respectively;
of which only 20% of it had been taken as cash collection as depicted above.
3.2. Financial Resources Allocation

3.2.1. FCY Payments
The total FCY payments during the 2013/14 FY had reached USD 6.6 billion, depicting 96.8% and
105.7% performances against target and previous year same period.
Further details depict that the FCY allocated for Railway projects and Metal and Engineering
Corporation had been utilized considerably below target [table 13]. FCY payments made to
Wheat Import, Shipping Lines, and Ministry of Defense had, on the other hand, exceeded
respective allocations.
The bank had also purchased USD 1.3 billion from NBE during the fiscal year, so as to fill the FCY
receipts versus payments gap in this regard.
21
Table 13: Details of FCY Payments /Outflows/

2013/14 Annual
2012/13 Variation %age Acmp’t
Revised
Particulars Actual Actual Vs. Plan
NBE Plan
(1) (3) 4=1-2 Vs Plan Vs Last Yr
(2)
1.Total Imports (A+B+C) 6,189.9 5,948.8 5,846.4 241.1 104.1 105.9
A. Public Imports 2,335.2 2,483.5 2,454.6 (148.3) 94.0 95.1
Major Projects 937.8 1,360.0 1,046.4 (422.2) 69.0 89.6
EEPCO 411.6 500.0 484.9 (88.4) 82.3 84.9
Sugar Corporation 91.2 85.0 80.4 6.2 107.3 113.4
Metals & Engineering Corporation 254.8 405.0 424.1 (150.2) 62.9 60.1
Housing Projects 69.8 70.0 35.8 (0.2) 99.7 195.0
Railway Project 110.5 300.0 21.2 (189.5) 36.8 521.2
Other Public Projects 1,397.4 1,123.5 1,408.2 273.9 124.4 99.2
Ethio Telecom 205.8 200.0 269.7 5.8 102.9 76.3
Eth Road Authority 28.0 120.0 112.4 (92.0) 23.3 24.9
Eth Shipping & Logistics Service 157.4 82.0 80.3 75.4 192.0 196.0
Ministry of National Defense 83.8 28.0 50.6 55.8 299.3 165.6
Ministry of Education 7.2 21.0 28.2 (13.8) 34.3 25.5
Edible Oil Import (MEWIT) 281.6 301.0 359.2 (19.4) 93.6 78.4
Sugar Import (Sugar Corporation) 24.8 27.5 108.0 (2.7) 90.2 23.0
Wheat Import (EGTE) 246.0 100.0 0.6 146.0 246.0
Ministry of Health - 1.0 -
Ministry of Agriculture & Rural Dev't 46.9 45.0 113.1 1.9 104.2 41.5
Regional & Federal Mass Media 21.2 30.0 26.9 (8.8) 70.7 78.8
Ethiopian Network Security Agency 19.7 35.0 14.4 (15.3) 56.3 136.8
Ministry of Foreign Affairs 36.8 30.0 17.5 6.8 122.7 210.3
Water & Sewerage Authority 24.5 35.0 75.1 (10.5) 70.0 32.6
Ministry of Transport - - 1.6
Other Public Imports 213.7 150.0 150.6 63.7 142.5 141.9
B. Fuel Import 2,306.3 2,363.0 2,308.2 (56.7) 97.6 99.9
C. Fertilizer & Other Inputs 391.4 415.1 196.6 (23.7) 94.3 199.1
D. Private Imports 1,157.0 1,147.9 887.0 9.1 100.8 130.4
Pharmaceutical 89.4 70.0 36.1 19.4 127.7 247.6
Textile Factories 23.2 39.9 8.7 (16.7) 58.1 266.7
Heavy Truck Import 1.2 36.0 - (34.8) 3.3
SME'S (For Lease Financing) - 2.0 -
Other Private Import 1,043.2 1,000.0 842.2 43.2 104.3 123.9
2.Transfers 197.3 260.0 217.7 (62.7) 75.9 90.6
Public Transfers 69.6 100.0 52.7 (30.4) 69.6 132.1
Private Transfers 127.7 160.0 165.0 (32.3) 79.8 77.4
3.FCY Account holders 231.8 170.0 196.8 61.8 136.4 117.8
Total Payments 6,619.0 6,839.5 6,260.9 (220.5) 96.8 105.7
3.2.2. Disbursement
The total disbursement during the fiscal year reached birr 79 billion, which had been above the
plan by birr 524.4 million (0.7%). Above plan disbursements had been made to some of the major
sectors [EEPCO, AA Housing Projects and Sugar Corporation]; since the deposit mobilization and
loan collection performances had been favorable. The loan requests of all sectors had initially
been reduced to make it match with the sum of the expected amount of incremental deposit and
loan collection performance of the bank – hence favorable results registered in this regard
22
resulted in increased approval of loans and bonds so as to meet original demands of some
institutions.
Furthermore, the ‘Other Traditional Loans’ category, which had been allotted for private
business clients, exceeded its plan by birr 3.8 billion due to the inclusion of birr 3.4 billion
disbursements to condominium loans, which entails no cash outlay.
Table 14: Breakdown of Loans and Bonds Disbursement

2013/14 Annual Last year Variation Vs. Plan
Particulars Actual Plan S. Period Absolute % age
1 2 3 4=1-2 5=1/2x100
1.Public sector 57,611.2 56,385.8 44,502.5 1,225.4 2.2
1.1 Major public Sector 44,184.6 44,800.0 33,702.5 (615.4) (1.4)
EEPCO 22,000.0 20,000.0 16,200.0 2,000.0 10.0
A.A. Housing Project 7,000.0 6,000.0 5,675.0 1,000.0 16.7
Railway Corporation 4,200.0 6,000.0 - (1,800.0) (30.0)
Sugar Corporation 10,499.1 9,500.0 6,019.8 999.1 10.5
Metal Engineering Corp. - - 2,500.0 - -
Ministry of Industry (Fertilizer Complex) 485.5 3,300.0 3,300.0 (2,814.5) (85.3)
Ethiopian shipping & logistics service - - 7.7 - -
1.2. Other Public Sector 13,426.6 11,585.8 10,800.0 1,840.8 15.9
Wheat Import (EGTE) 4,770.9 2,044.8 - 2,726.1 133.3
Edible Oil Import (MEWIT) 7,497.0 8,019.0 7,728.3 (522.0) (6.5)
Sugar Import (Sugar Corporation) 478.3 522.0 2,063.5 (43.7) (8.4)
Other Public Enterprises 680.4 1,000.0 1008.2 (319.6) (32.0)
2.Fertilizer and Other Inputs 10,139.7 10,115.0 5,489.4 24.7 0.2
3.Private Sector 11,273.3 11,999.0 6,514.7 (725.7) (6.0)
Heavy Truck Purchase 83.6 999.0 - (915.4) (91.6)
SME Lease Financing - 2,000.0 - (2,000.0) (100.0)
Net Disbursement through Pre-shipment L. 915.4 2,596.5 - (1,681.1) (64.7)
Net Disbursement through O/D 457.1 350.9 178.8 106.2 30.3
Other Traditional Loans* 9,817.2 6,052.6 6,335.9 3,764.6 62.2
Grand Total 79,024.2 78,499.8 56,506.6 524.4 0.7
*Including birr 3.4 billion disbursements to condominium loans which entails no cash outlay.
23
3.3. Other Financials

3.3.1. Outstanding Loans and Bonds
The total outstanding loans of the bank stood at birr 89.7 billion at the end of June 2014, depicting
shortfall of birr 1.7 billion [2.1%] from the target, mainly due to the above target collection, as
discussed in section 3.3 above. Outstanding amount of bonds, on the other hand, had exceeded
its target by birr 14.3 billion, mainly due to above plan disbursement to EEPCO and AA Housing
Projects (even from the revised plan) and the reclassification of loans of Railway Corporation into
bonds (birr 5.3 billion).
Table 15: Outstanding Loans, Advances and Bonds

Jun 30, 2014 Jun 30, Absolute Variation %age
2013 against: Accomplishment
Particulars Actual Plan
Actual Plan June 30 Plan June 30
1 2
3 4=1-2 5=1-3 6=1/2*100 7=1/3*100
Loans & Advances 89,665.2 91,370.9 70,432.0 (1,705.7) 19,233.2 98.1 127.3
Term Loans 77,169.6 80,036.4 61,161.0 (2,866.8) 16,008.6 96.4 126.2
Overdraft loans & Pre-Shipment 12,495.6 11,334.5 9,271.0 1,161.1 3,224.6 110.2 134.8
Bonds 114,014.5 99,731.0 83,055.0 14,283.5 30,959.5 114.3 137.3
Corporate/Coupon 112,386.8 97,749.0 80,679.0 14,637.8 31,707.8 115.0 139.3
Government Bond 1,627.7 1,982.0 2,376.0 (354.3) (748.3) 82.1 68.5
Grand Total 203,679.7 191,101.9 153,487.0 12,577.8 50,192.7 106.6 132.7
3.3.2. Non Performing Loans

The total non-performing loans of the bank stood at birr 1.3 billion as at the end of June 2014;
declining favorably from target by birr 315.7 million [19.6%]. The non-performing loans to total
loans and advances ratio had also improved to 1.4%; which is better than both June 30, 2013
baseline position and the target set for the period.
Table 16: Status of Non-Performing Loans

Jun 30, 2014 Jun 30, Variations

2013
Particulars
Actual Plan Actual Abs % age Absolute % age
1 2 3 4=1-2 5=4/2 6=1-3 7=6/3
Substandard 205.4 891.7 1,241.7 (686.3) (77.0) (1,036.3) (83.5)
Doubtful 157.5 161.3 74.4 (3.8) (2.4) 83.1 111.7
Loss 932.6 558.2 251.0 374.4 67.1 681.6 271.6
Total NPLS 1,295.5 1,611.2 1,567.1 (315.7) (19.6) (271.6) (17.3)
Total O/S Loans & Adv. 89,665.2 91,370.9 70,432.3 (1,705.7) (1.9) 19,232.9 27.3
NPLs Ratio 1.4 1.8 2.2 (0.4) (22.2) (0.8) (36.4)
24
The new injections to non performing loans during the fiscal year had been far better than
anticipated amounts, which contributed for the reduction in NPLs status in this regard.
Table 17: Net Changes in Non-Performing Loans Position
Jun 30, 2014 Variation 2012/13 2011/12
Particulars
Actual Plan Absolute % age Actual Actual
1 2 3=1-2 4=3/2*100 5 6
Beginning NPLs Stock 1,567.1 1,567.1 - - 430 293
Less: Resolved 565.8 855.9 (290.1) (33.9) 368 154
Add: Newly injected 294.2 900.0 (605.8) (67.3) 1,505 291
Ending NPLs Stock 1,295.5 1,611.2 (315.7) (19.6) 1,567 430
Total Loans & Adv. 89,665.2 91,370.9 (1,705.7) (1.9) 70,432 58,327
NPLS Ratio 1.4 1.8 (0.4) - 2.2 0.7
Out of the outstanding NPLs stock of birr 1.3 billion; the major NPLs with relatively big
outstanding balances of more than birr 10 million– and for which a detail action plan have been
under implementation for their resolution – are enumerated in the table here below:
Table 18: Major NPLs Outstanding at the end of 2013/14 FY

(In Millions of birr)
No Name of Borrower Sector Balance Status of NPL

1 Saygen Dima Textile Manufacturing 437.1 Under Negotiation to clear the accrued interest
2 Muluneh Kaka Export 94.2 Under Foreclosure
3 Akir Construction Construction 87.1 Under Negotiation for settlement
4 Karature Agro PLC Agriculture 55.3 Foreclosure Suspended since payment started
5 Bazen Agric & Ind Dev’t PLC Agriculture 42.1 Under Foreclosure
6 Yegeta Trading plc Manufacturing 39.3 Under litigation with the Insurance Company
7 Yegeta Trading plc Export /Import 17.0 Under litigation with the Insurance Company
8 Mame Steel plc Manufacturing 39.2 Under Negotiation
9 Yegenet PLC Pre-shipment 36.8 Under litigation
10 Yegenet PLC Export 25.4 Under Negotiation
11 Getaneh Menale Tamiru Pre-shipment 32.4 Attachable property found & under litigation.
12 Mam Trading Plc Pre-shipment 28.5 Under litigation
13 Bedfam Int’l PLC Export 21.0 Under Foreclosure
14 Shebele Transport PLC Transport 17.2 Under Foreclosure/Voluntary liquidation
15 Inova packaging plc Manufacturing 16.6 Promised to clear the arrears
16 Mohammed Abd. Ogsedey PLC Export 16.4 Under workout
17 Tabor Ceramic Products plc Manufacturing 15.3 30 days legal notice served.
18 Bale PlC Manufacturing 14.9 Foreclosure Suspended
19 Fitsumzeab Asegedom Manufacturing 14.2 Rescheduled & paying regularly.
20 Crystal Tannery PLC Manufacturing 12.3 Under Negotiation
Privatization Agency had been requested to settle,
21 Caustic soda Factory Manufacturing 11.2
but no response so far.
25
Total 1,073.5
3.3.3. Suspense Accounts Management
The positions of long and total receivable suspense accounts stood at birr 4.3 billion and 6 billion,
respectively, at the end of June 2014. All districts had managed to decrease their respective long
and total outstanding suspense accounts compared with the beginning June 30, 2013 positions,
as depicted in the tables below.
Table 19: Long Outstanding Receivable Suspense

In millions of Br
Long Suspense - Receivables
S/N DISTRICT Jun 30, Jun Absolute
2014 30,2013 Change
1 Gonder 12.2 180.0 (167.8)
2 Jimma 21.5 129.3 (107.8)
3 East 24.9 226.5 (201.6)
4 B/Dar 30.7 454.4 (423.7)
5 South 33.8 168.1 (134.3)
6 North 46.4 250.6 (204.2)
7 Nekmt 48.9 382.6 (333.7)
8 Mekele 52.5 509.3 (456.8)
9 Dessie 53.7 618.5 (564.8)
10 Hawasa 54.8 360.4 (305.6)
11 Wolaita 56.4 218.9 (162.5)
12 Shash. 57.5 260.9 (203.4)
13 Adama 72.3 800.1 (727.8)
14 D/Dawa 75.5 418.8 (343.3)
15 West 86.0 328.7 (242.7)
Sub Total 727.1 5,307.1 (4,580.0)
HO Organs & CPCs 3,590.3 1,649.2 1,941.1
CBE TOTAL 4,317.4 6,956.4 (2,639.0)
The major gap in performance of long outstanding suspense reduction had been at the HO where
the inter-branch receivable long outstanding balance depicted huge increments as a result of
delay in clearing cash withdrawal and lodgment with NBE.
26
Table 20: Total Outstanding Receivable Suspense

In millions of Br
Total Suspense - Receivables
S/N DISTRICT Absolute
Jun 30, 2014 Jun 30,2013
Change
1 Gonder 42.7 501.6 (458.9)
2 B/Dar 68.7 936.6 (867.9)
3 Jimma 69.6 336.2 (266.6)
4 South A. 82.5 383.9 (301.4)
5 East A. 95.7 698.1 (602.4)
6 Wolaita 104.5 591.0 (486.5)
7 Nekemt 125.3 903.5 (778.2)
8 Shash. 141.2 785.7 (644.5)
9 North A. 154.2 628.7 (474.5)
10 West A. 189.0 721.1 (532.1)
11 D/Dawa 192.1 1,000.5 (808.4)
12 Dessie 192.9 1,317.6 (1,124.7)
13 Adama 193.0 1,320.4 (1,127.4)
14 Hawasa 207.0 1,017.3 (810.3)
15 Mekele 209.0 1,610.4 (1,401.4)
Sub Total 2,067.4 12,752.6 (10,685.2)
HO Organs & CPCs 3,962.3 4,582.9 (620.6)
CBE TOTAL 6,029.9 17,335.6 (11,305.7)
3.3.4. Income, Expenses and Profit
A. Income
The total income of the bank during the 2013/14 FY had reached birr 17.2 billion, exceeding the
plan by around birr 500 million [3%].
Table 21: Summary of Income

2013/14 Annual
Last Yr Variation
Variation
Particular Actual Plan S. Period
Abs. %age Abs. % age
1 2 5
3= (1-2) 4=3/2*100 6= (1-5) 7=6/5*100
Interest income 11,997 10,763 1,234 11.5 9,480 2,517 26.6
Commissions & charges 4,004 4,813 (809) (16.8) 2,901 1,103 38.0
Gain on FX (net) 1,046 991 55 5.5 988 58 5.9
Other income 148 130 18 13.8 123 25 20.3
TOTAL INCOME 17,195 16,697 498 3.0 13,492 3,703 27.4
27
Interest Income
The total interest income had reached birr 12 billion, exceeding the plan by birr 1.2 billion [11.5%].
The increase in interest on loans and advances [birr 814 million], coupon bonds [birr 242 million]
and interest earned on deposits with domestic banks [182 million] had been the major causes for
the above plan achievement in this regard.
Commission and Charges
The total earning from commission and charges had been birr 4 billion, being under plan by birr
808.7 million [16.8%]. The major cause for the underperformance had been decline in outward
swift charges [976.6 million], guarantee commission [151.9 million], commission on LMTS [105.6
million], telephone/telegram/telex charges [53.9 million] and POS commission and charges [29.2
million]. The underperformances in commission on LMTS and telephone/telegram/telex charges
had been mainly caused by the lifting-up of commission payment on account to account transfers
with the aim of converting cash transfers into deposits.
On the other hand, commission on import LC, service charge on outward remittances and service
charges on other services-local had shown improvements of birr 282.5 million, 100.4 million and
97.4 million against respective targets.
Net Gain on Foreign Exchange

The net gains from foreign exchange had increased from plan by birr 55 million due mainly to
asset and liability revaluation gain which had been above the planned amount.
Other Income
The total other income collected during the year reached birr 148.4 million, favorably increasing
by birr 18 million [13.8%] from plan. The major items that depicted increase from plan had been
gain on disposal of fixed assets [up by birr 7.2 million], uncollectible loans collected [up by birr
5.7 million], rent income [up by birr 5.6 million] and estimation and processing fees [up by birr
4.3 million]. Please refer Annex 5 for further details.
B. Expenses
During the 2013/14 FY, the total expenses of the bank reached birr 7.5 billion, increasing by birr
1.7 billion [28.4%] from budget as depicted below.
28
Table 22: Summary of Expenses

(In Million Birr)
2013/14 Annual Last Yr Variation 1 Vs. 3
Variation 1 Vs. 2 S. Period
Particulars Actual Budget
Abs. % age Actual Abs. %age
1 2
3=1-2 4=3/2 (5) 6=1-5 7=6/5
Interest Expenses 3,436 2,808 628 22.4 2,376 1,060 44.6
Salaries & Benefits 2,200 1,898 302 15.9 1,178 1,022 86.8
General Expenses 1,873 1,144 729 63.7 1,514 359 23.7
Total Expenses 7,509 5,850 1,659 28.4 5,068 2,441 48.2
Interest Expenses
The total interest expenses of the year reached birr 3.4 billion, which had been significantly above
the target by birr 628 million; the major reason being the interest paid on savings which had
favorably exceeded the target as discussed in section 3.1.1 of this document [Please refer Annex
6A for further details].
Salaries and Benefits

The total salaries and benefits expense reached birr 2.2 billion, depicting an increase of birr 302
million [15.9%] from budget. The major cause for above budget expense in this regard had been
early recruitment of 3,905 employees before the planned period.
General Expenses
During the 2013/14 fiscal year, the total general expenses of the bank had reached birr 1.9 billion,
exceeding the budget by birr 729 million [63.7%]. The over utilization of the budget had been
mainly due to provision held for uncollectible loans and advances [birr 538 million] that had not
been considered during budget setting. The remaining 191 million above budget utilization has
resulted mainly due to expenses incurred in wages, depreciation, electronic data transfer and
insurance expense accounts which had exceeded respective budgets by birr 85.5 million, 70
million, 26 million and 19 million, respectively.
Wage expenses had exceeded the budget due to the approval and implementation of the
increase in monthly wage payment to non-clerical workers of Commercial Nominees PLC.
Insurance and depreciation expenses had increased due to additional expenses on capitalized
newly purchased assets [vehicles, office furniture, office equipments and IT equipments] which
hadn’t been accounted upon setting the budget.
Expenses with approved limits had been managed within budgets, while some items under
controllable expenses exceeded their respective budgets as depicted in Annex 6C and 6D. The
controllable expense items which exceeded their respective budget are stationary and printing,
29
telephone, and overtime expenses; all of which are directly related with the increased volume of
business during the year.
C. Profit before tax

The profit before tax of the bank during the 2013/14 fiscal year reached birr 9.7 billion, depicting
shortfall from target by birr 1.2 billion [10.7%] in relation to the earning and spending levels on
income and expense accounts discussed in the preceding sections; while it had exceeded the
profit level of previous year same period by birr 1.3 billion (15%).
Table 23: Profit Summary

2013/14 Annual Last Yr Same
Variation 1 Vs. 3
Particulars Actual Plan Variation 1 Vs. 2 Period
(1) (2) (3)
Absolute % age Absolute %age
Total Income 17,195 16,697 498 3.0 13,492 3,703 27.4
Total Expenses 7,509 5,850 1,659 28.4 5,068 2,441 48.2
Profit Before Tax 9,686 10,847 (1,161) (10.7) 8,424 1,262 15.0
3.3.5. Balance Sheet
Assets
The total asset of the bank had reached birr 242.7 billion, which increased by birr 48.2 billion
(24.8%) during the fiscal year, as a result of the increases in coupon/corporate bonds [by birr 29.7
billion] and loans and advances to customers [by birr 19.6 billion].
On the other hand, cash & balances with NBE stood considerably below target and June 30, 2013
beginning positions by birr 11.5 billion and birr 2.7 billion, respectively.
30
Table 24: Assets Position

(In millions of birr)
Jun 30, 2014 June 30, Annual Actual
Variation 2013 Variations
Abs. %age Actual Abs. %age
1 2 5
3=(1-2) 4=3/2 6=(1-5) 7= 6/5
Cash and Balance with NBE 14,077 25,610 (11,533) (45.0) 16,748 (2,671) (15.9)
Investment in Gov’t Securities 1,628 1,982 (354) (17.9) 2,376 (748) (31.5)
Placements with other Banks 17,098 14,299 2,799 19.6 17,936 (838) (4.7)
Loans & Adv. to Financial Inst. 388 515 (127) (24.7) 509 (121) (23.8)
Loans and Adv. to Customers 89,277 90,856 (1,579) (1.7) 69,726 19,551 28.0
(-) Prov. For Impairment Losses (2,403) (1,870) (533) 28.5 (1,870) (533) 28.5
Investment in Bonds 110,137 97,749 12,388 12.7 80,429 29,708 36.9
Other Investments* 349 236 113 47.9 251 98 39.0
Net O. Assets & Prop. & Equip. 12,000 7,282 4,718 64.8 8,282 3,718 44.9
Intangible Assets 88 203 (115) (56.7) 101 (13) (12.9)
Leasehold Land 87 87 - 87
Total Assets 242,726 236,862 5,864 2.5 194,488 48,238 24.8
* Investment in subsidiary, investment in associates and investments in shares.
Liabilities
At the end of the 2013/14 FY under review, the total liabilities of the bank stood at birr 232 billion;
depicting birr 42.7 billion increment from June 30, 2013 beginning position, mainly due to the
increase in customers’ deposits.
Table 25: Total Liabilities

(In millions of birr)
Jun 30, 2014 Jun 30, Annual Actual
Variation 2013 Variations
1 2 5
3=(1-2) 4=3/2 6=(1-5) 7=6/5
Deposit due to other banks 926 445 481 108.1 497 429.0 86.3
Customers deposits 192,275 197,080 (4,805) (2.4) 153,155 39,120.0 25.5
Taxation 3,056 3,329 (273) (8.2) 2,662 394.0 14.8
Other liabilities* 35,766 25,097 10,669 42.5 32,969 2,797.0 8.5
Total liabilities 232,023 225,951 6,072 2.7 189,283 42,740.0 22.6
* Includes A/C payable, Margin Held A/C, H.O. & Inter Branch A/C, and others.
Capital and Reserves

The total capital and reserves of the bank reached birr 10.7 billion at the end of June 2014,
depicting an increase of birr 1.7 billion over the balance of June 30, 2013.
31
Table 26: Capital, Reserves and Risk Weighted Capital Adequacy Ratio
(In 000 Br)
Jun 30, 2014 Jun 30, Annual Actual
Variations 2013 Variations
1 2
3=1-2 4=3/2*100 5 6=1-5 7=6/5*100
1. Capital and reserves 10,703 10,910 (207) (1.9) 9,031 1,672.0 18.5
- Paid up capital 8,083 4,000 4,083 102.1 4,000 4,083.0 102.1
- Reserve 2,620 6,910 (4,290) (62.1) 5,031 (2,411.0) (47.9)
2. Risk-weighted Assets 83,026 84,371 (1,345) (1.6) 67,817 15,209.0 22.4
(On & Off Balance Sheet)
3. Capital requirements (8% of 2) 6,642 6,750 (108) (1.6) 5,425 1,217.0 22.4
4. Excess /shortfall capital (1-3) 4,061 4,160 (99) (2.4) 3,606 455.0 12.6
Capital/RW Assets Ratio 12.9 12.9 - - 13.3 (0.4) (3.0)
3.3.6. Performance Indicators

A. Liquidity Ratios
Among the liquidity ratios, liquid assets to deposit ratio stood below the NBE requirement, the
target and the status at June 30, 2013; and the loans to deposit ratio (including bonds) also
increased unfavorably from plan and June 30, 2013 status, both reflecting the increasing liquidity
challenges the bank had been facing.
B. Asset Quality Ratios

The NPLs to total loans and advances ratio had shown improvement from plan as well as from
beginning period status. The provisions to outstanding loans ratio, on the other hand, had
remained the same at the end of 2013/14 fiscal year with that of the beginning of the period.
C. Profitability Ratios
The return on assets (ROA) and return on equity (ROE) ratios had favorably been well above their
respective standards.
D. Statutory Requirement Ratios

The capital adequacy and reserve ratios of the bank stood at 12.9% and 7.3%, respectively, both
performing above the NBE’s requirements, although both ratios had been below their respective
status as at the beginning of the fiscal year.
32
Table 27: Major Performance Indicators/Ratios (In %)

STD/ Jun 30, 2014 2013 Actual Variance
Particulars REQ* Actual Plan Jun 30, Mar 31, Dec 31,
7= (1-2) 8=(1-4)
(In %) (1) (2) (4) (5) (3)
1. Liquidity Ratio
Liquid Asset to Net Deposit >20 17.0 20.2 26.3 21.5 16.2 (3.2) (9.3)
Loans to Deposit (Excluding Bonds) 46.4 46.3 45.6 49.0 46.7 0.1 0.8
Loans to Deposit (Including Bonds) 104.2 95.7 99.2 102.1 104.6 8.5 5.0
Loans to Deposit (Including Bonds & EGTE Receivable) < 90 105.9 103.5 111.8 103.5 106.2 2.4 (5.9)
Earning Assets to Total Assets >80 89.2 86.0 82.4 84.3 87.2 3.2 6.8
2. Capital Adequacy Ratio
Capital Adequacy Ratio (RW)** >8 12.9 12.9 13.3 12.2 13.0 - (0.4)
3. Asset Quality
NPLs to Total Loans & Advances <5 1.4 1.8 2.2 1.2 1.9 (0.4) (0.8)
Provisions to Loans Outstanding 2.7 2.0 2.7 1.9 2.4 0.7 -
4. Profitability
Return on Asset (ROA) >1 4.4 5.0 4.8 4.5 5.0 (0.6) (0.4)
Return on Equity (ROE) >13 98.0 108.8 101.2 92.7 103.1 (10.8) (3.2)
Cost to Income 46.0 36.5 40.0 38.4 44.7 9.5 6.0
5. Reserve Ratio >5 7.3 7.3 9.3 13.5 8.2 - (2.0)
* Stands for Standards of African Development Bank, Western Countries and NBE's Requirements.
** RW = Risk Weighted: Total Capital and Reserve/Risk Weighted Asset
ROA= Profit before Tax/Average Total Assets ROE= Profit before Tax/Average Total Capital
33
4. NON-FINANCIALS
4.1. CUSTOMER SATISFACTION SCORE

The level of customer satisfaction of the bank, as per the survey conducted during the year 2014
reached 76.6% which had shown slight improvement over the level of satisfaction (75.4%)
registered in 2013. The major findings of the satisfaction survey, for which an action plan had
been drawn for implementation, had been the following:
 The assessment result revealed that overall service quality of the bank has been rated as
the best area of customer satisfaction, followed by reliability;
 Neatness of office spaces had been one of the areas where customers had poorly rated
the bank;
 A number of modern banking technologies users /ATM, VISA card, etc/ had rated their
experience and satisfaction as poor.
4.2. EMPLOYEE SATISFACTION SCORE

The overall satisfaction level of employees, as per the survey conducted during the year 2014 had
reached 74.1%, which had been much higher than the 40.4% level obtained in the 2012 survey
conducted by external consultant. The major findings, for which an action plan had been
developed for implementation, had been the following:
 Limited job rotation has been found to be dissatisfying factor in the job characteristics
category among CBE employees;
 Gaps has been observed in ensuring participatory environment in planning in some
processes;
 Employees have also said that they have limited acquaintance with the top management,
since some of them forwarded no comment responses regarding the top management;
 Some of the respondents claimed that employees are not treated equally for selection
and promotion;
 A number of employees have also claimed that the training that they had participated
didn’t help them in their career advancement and they also have concerns on the
selection of trainees.
34
5. GRAND INITIATIVES
5.1. Deposit Mobilization Strategy
The detailed assessments and analysis on the deposits mobilization strategy of the years 2012/13
– 2014/15 had been condensed into major strategic actions along with implementation plan for
the upcoming years; of which, an annual implementation plan has been drawn out. The major
accomplishments against the tasks scheduled for the 2013/14 fiscal year under review had been
tabulated hereunder [detailed comparison against the 2013/14 action plan had been depicted in
Appendix 1].
35
Table 28: Implementation Status of the Deposit Mobilization Strategy for the 2013/14 Fiscal year
Strategic Actions Summary of Major Performance Levels
1. Awareness  First round management discussion conducted at all districts and major branches by Process Council members
Creation and with the purpose of strengthening awareness on major targets of the year 2013/14;
Public  Training had been delivered by the process council members at all districts (for three days at each group) on
Education the deposit mobilization strategy for all branch managers, district management teams and relevant positions;
 Discussion forums with development partners continued at district and branch levels;
 Second round management discussion has been conducted on least performing branches of selected districts
to enhance their performance and narrow the performance disparity;
 Workshop has been organized with selected Addis Ababa city branch managers and customer service
managers on how to enhance the bank’s stake in Addis Ababa city through narrowing the gaps on corporate
thinking, service quality, leadership and others.
2. Expand  137 new branches had been opened during the budget year under review;
Banking  Feasibility studies had been underway to open branches in South Africa, Washington DC, Dubai and Djibouti;
Accessibility  Van-based mobile banking services had been provided on various sites;
 433 ATMs and 244 POSs have been operational till June 2014;
 673,292 new VISA cards had been distributed;
 The purchase of 200 ATMs had been finalized and delivered by suppliers; and the purchase of 3,890 POSs is
under clearances stage and additional 200 ATMs and 2,000 POSs is under financial appraisal stage;
 Internet and mobile banking services had been provided to additional 1,771 & 119,912 users respectively;
 The core banking system had been rolled-out to 325 additional branches, making total online branches and
Head Office organs to be 634.
3. New Deposit
 New deposit products: Interest Free Banking Service, Women Saving Account and Youth/Youth teen Accounts
Products &
had went operational.
Services
36
…Implementation Status of the Deposit Mobilization Strategy for the 2013/14 Fiscal year
4. Persistently  Strengthening the complaint handling system: customers’ complaint summary report had been quarterly
Promote produced and submitted to concerned organs;
Service  Windows expansion continued in most branches;
Excellence:  Provision of staff development and customer handling trainings /based on gap identification/ underway per
HRD schedule;
 Standardizing the physical office appearance of 22 major city branches had been underway;
 433 ATMs and 244 POSs are currently on service; and the total number of card holders reached 973,762;
 The total number of users of internet and mobile banking services reached 1,771 and 119,912 respectively;
 Performance management system pilot has been finalized, roll out had been finalized to 12 processes and
monitoring had been underway;
 A dedicated window had been nominated to premium and business customers of the bank.
5. Adopt  Second round Prize linked scheme prize drawing ceremony had been finalized and the third round scheme had
Innovative been launched;
Marketing &  Broadcasts, print media & spots had been widely transmitted from center;
Promotion:  7.6 million Brochures, flyers and posters had been distributed in six local languages.
6. Enhance  Most districts and branches track compensation payments made to farmers and home owners and large
Money purchasers via lobbying the sellers,
Tracking  Accessing the government projects and providing banking services at sites: districts and branches mobilize
significant amounts of deposit through efforts in this regard;
 Establishment of inter-district and inter-branch synergy in tracking cross-district/branch payments: Efforts have
been made by several branches in sharing information to each other to mobilize deposits through this scheme;
 Large account holders tracking & monitoring: districts and branches exert effort to monitor the deposit
movements in these accounts.
7. Expand  A total of 2.07 million new deposit accounts had been opened during the period under review.
Customer Base
37
5.2. Human Resources Development [HRD] Strategy
The performance level on the HRD strategy implementation during the 2013/14 fiscal year
seen against the major work plan elements had been discussed here below:
5.2.1. Technical assistance to implement HRD strategy:

 The HRM structure had been reorganized, managers had been appointed and teams ha
been reorganized to support the HRD strategy implementation;
 Various orientation workshops by the FSFM consultant team had been conducted as p
of coaching Directors, Managers, Experts and Officers under the HRM process;
 Learn and share sessions had been scheduled every month and all the teams in the H
sub process had got the opportunity to discuss with and share experiences of the FS
consultant team;
 Weekly scheduled regular meetings had been arranged among the Directors, Manag
and the Consultant team for updates on the activities in the implementation of the syste
The same team also meets fortnightly to set targets for two weeks and evaluate
accomplishments on same;
 A document on the establishment of the CBE center of excellence had been drafted as p
of strengthening the capacity of delivering trainings for the upcoming years [including
establishment of institutional relationships with local/foreign training centers].
5.2.2. Performance Management System (PMS)

 The pilot implementation of individual performance management/measurement syst
had went live on April 2013, on four branches [under CATS] and the Credit Managem
process; hence, since then the individual level performance evaluation had been underw
in these processes, gradually including additional branches on the pilot test;
 All processes had started implementation of the system and target setting had be
finalized in all processes until the end of June 2014, except in Information Systems proc
and offices under the president office;
 Implementation follow-up had been underway on all processes regarding contract
target agreement signing on individual basis, data tracking system developme
documentation, feedback and coaching;
5.2.3. Career and Succession Management

 The Individual Development Plan (IDP) of the 24 successors for Phase I critical roles
Process Council roles] had been compiled and each successor’s IDP and personal pro
had been analyzed in a view to identify leadership training requirements and technical ga
respectively. Screening of potential successors for 6 additional critical roles (Phase II) h
been conducted, 9 successors had been considered and the 360 degree assessment is
accomplished. In total 33 successors had been identified for the V/P and Chief roles;
 Considering the managers at the Head office (at Job grade 14 & 15), and the Branch
managers at Branch III & IV as potential successors for the Director and District Manager
roles, screening and analyzing of the personal profiles of 131 potential successors in this
pool had been finalized. Selection of potential raters for the successors in this pool has also
been finalized.
 To roll out the succession scheme, successors’ eligibility criteria both for long term (for all
the critical roles) and medium term had been developed in consultation with the FSFM
Consultants;
 With the objective of measuring and evaluating the overall efficiency and effectiveness of
the Career and Succession activities, Matrix had been developed by the FS consultants and
analysis had been conducted to exercise its appropriateness and applicability;
 Draft career management guideline had been developed.
5.2.4. Training and system development

 Three external training providers [FSFM, Crown agents & KPMG] concluded contractual
agreement with the bank and actively participated in the delivery of developmental
trainings;
 The AAU School of Commerce had also finalized agreement with the bank and started
delivering trainings;
 During the 2013/14 fiscal year, a total of 1,271 employees have participated in leadership
training programs [plan 555] in the areas of change management, leadership, human
resources management for non-HR managers, team dynamics etc; whereby priority had
been given to potential successors identified by the Talent Management Committee (TMC)
to attend leadership training programs;
 Training evaluation scheme had been instituted through questionnaires being
administered at the end of each session of developmental trainings to capture feedback of
trainees on both the quality and style of delivery.
5.3. Accessibility
5.3.1. Branch Opening
The bank had opened 137 new branches during the 2013/14 FY and had mobilized a total of birr
1.4 billion deposit from these new branches, of which, private deposit comprises 81.4% of the
total. The total number of branches of the bank had accordingly reached 832 at the end of
June 2014.
39
Table 29: New Branches of 2013/14 Annual
(Birr in 000)
No. of Branches Opened Amount of Deposit mobilized:

No District Private & %age Share
2013/14 Last Yr Same Total
Individuals’ of Private
Annual Period Deposit
Deposit Deposit
1 EAST A. 8 10 82,202 89,565 91.8
2 MEKELE 15 11 163,151 164,816 99.0
3 NORTH A. 10 12 114,654 134,228 85.4
4 NEKEMTE 10 10 99,422 129,748 76.6
5 DIRE DAWA 9 11 83,677 91,764 91.2
6 SHASHEMENE 12 6 83,490 98,196 85.0
7 BAHIR DAR 10 11 82,078 146,725 55.9
8 JIMMA 10 8 75,985 92,355 82.3
9 DESSIE 9 7 73,255 87,257 84.0
10 GONDAR 5 10 60,905 95,848 63.5
11 WOLAYTA 7 8 57,303 75,798 75.6
12 WEST ADDIS 10 10 53,601 62,130 86.3
13 SOUTH A. 8 7 50,579 50,737 99.7
14 ADAMA 8 17 36,686 50,760 72.3
15 HAWASSA 6 10 20,945 28,873 72.5
CBE TOTAL 137 148 1,137,934 1,398,800 81.4
Incremental deposits from 148 branches opened in 2012/13 FY 3,132,641 3,472,153 90.2
The 148 branches opened during the 2012/13 fiscal year had also managed to mobilize birr 3.5
billion incremental deposits during the 2013/14 fiscal year, of which 90.2% had been from
private sector depositors.
5.3.2. E-payment
A. E-payment Channels and Card Holders Recruitment
The total numbers of ATM and POSs reached 433 and 244 including the net increase in the
deployment of ATMs and POSs by 183 and 38 during the 2013/14 fiscal year.
The total number of CBE reliable cards distributed for customers reached 973,762 including
additional 673,292 reliable cards issued during the fiscal year. The performance in card
issuance, however, had still been below plan by 25.2%.
Out of the 973.7 thousand card holders, only 32.3% had been transacting, with at least one
ATM transaction per card. The remaining are inactive cards, which needs further effort
towards awareness creation on the card holders, revisiting of the bank’s cardholders
recruitment approach [to ensure whether cards are being issued for eligible and literate
customers] and further checking of the efficiency in card distribution [to ensure that cards are
not held by branches for reasons of inability to find customers and so on].
Table 30: ATM and POS Channels and E-payment Card Users
40
(In Number)
No of Channels No of Card Holders
Ending,
Beginning, Ending, 2013/14 Annual Incremental
Jun 30, 2014
DISTRICTS Jun 30, 2013 Jun 30, 2014 BegnningJune
%age of
30, 2013 %age
Plan Actual Number Active
ATM POS ATM POS Acmp’t
Cards
GONDAR 11 11 18 9 6,391 30,000 54,057 180.2 60,448 32.8
JIMMA 10 7 15 - 19,372 30,000 34,182 113.9 53,554 26.1
NORTH A. 37 5 42 44 57,760 80,000 85,528 106.9 143,288 46
EAST A. 32 19 42 94 55,827 80,000 75,113 93.9 130,940 39.3
WEST A. 24 3 26 10 26,659 80,000 70,426 88.0 97,085 21.3
SOUTH A. 26 2 47 42 37,295 80,000 69,474 86.8 106,769 39.4
B.DAR 11 17 21 8 22,491 80,000 60,437 75.5 82,928 20.8
SHASHEM. 8 4 15 - 5,586 30,000 22,597 75.3 28,183 27.7
DESSIE 9 21 16 9 2,718 30,000 21,984 73.3 24,702 21.2
WOLITA 8 2 14 3 6,934 30,000 18,668 62.2 25,602 30.1
NEKEMTE 9 7 11 - 1,916 30,000 17,833 59.4 19,749 26.5
D/DAWA 13 14 18 1 18,351 80,000 39,051 48.8 57,402 28.4
HAWASSA 15 32 22 11 15,085 80,000 36,730 45.9 51,815 32.9
MEKELLE 16 47 23 13 12,795 80,000 34,018 42.5 46,813 32.9
ADAMA 10 15 21 - 11,054 80,000 33,007 41.3 44,061 19.2
TS NR/NT 236 - 187 423 64.1
E-Payment 11 82 - -
Total 250 206 433 244 300,470 900,000 673,292 74.8 973,762 32.3
B. International and local ATM and POS transactions
The total number of local ATM transactions had reached 5.1 million and the number of
international ATM transactions had also reached 113.0 thousand during the fiscal year. The
amount of money paid by the ATMs had also been birr 4.5 billion for local transactions and
birr 331 million for international transactions during the fiscal year.
The total number of transactions during the year at CBE POSs has reached 10,838 having a
total value of birr 60 million.
A total of 20.9 million USD had also been mobilized through ATMs and POSs in the review
period, which had been above target of USD 20 million by 4.5%.
C. ATM Performance Summary
According to the monitoring report of 417 ATMs (through Gasper Monitoring tool), the
average percentage of these ATMs uptime had been 73% while the total downtime had been
27% during the review period. Further analysis on breakdown of the ATM downtime had also
revealed that communication/connectivity problem accounts for 17.6% of the downtime
followed by cash out contributing for 5% of the ATMs downtime.
D. Mobile & Internet Banking Users
41
The users of mobile and internet banking services had reached 119,912 and 1,771 including the
110,676 and 1,556 new users recruited during the fiscal year under review, although both had
been far behind their respective targets.
The number of local money transfer transactions via mobile banking reached 5,145 during the
review period, with a total value of birr 19.2 million. The number of transactions via internet
banking had also reached 605 with a transaction volume of birr 9.5 million.
Table 31: Internet and Mobile Banking Users

IN Number
No of Mobile Banking Users No of Internet Banking Users
Jun 30, 30- New Users During Jun 30,
DISTRICT Jun New Users During 2013/14 DISTRICT
2014 Jun 2013/14 2014
S 30 S
Acmp’ (Ending 201 Actua Acmp’ (Ending
2013 Plan Actual Plan
t [%] ) 3 l t [%] )
GONDAR 85 11,000 15,319 139.3 15,404 NORTH A. 58 3,000 696 23.2 754
NORTH A. 996 19,750 19,116 96.8 20,112 EAST A. 38 3,000 178 5.9 216
WEST A. 495 19,750 14,708 74.5 15,203 SOUTH A. 108 3,000 162 5.4 270
JIMMA 327 11,000 6,784 61.7 7,111 WEST A. 3 3,000 143 4.8 146
SOUTH A. 849 19,750 11,864 60.1 12,713 GONDAR 1 1,000 25 2.5 26
HAWASS
840 11,000 6,050 55 6,890 2,000 5 0.3 5
D.DAWA A
EAST A. 638 19,750 8,621 43.7 9,259 NEKEMTE 1 750 1 0.1 2
B.DAR 361 11,000 4,621 42 4,982 ADAMA 1 3,000 3 0.1 4
MEKELLE 113 11,000 4,138 37.6 4,251 MEKELLE 1 2,000 1 0.1 2
DESSIE 84 11,000 3,699 33.6 3,783 B.DAR 2,000 1 0.1 1
SHASH. 49 11,000 3,610 32.8 3,659 DESSIE 1 750 - - 1
NEKEMTE 181 11,000 3,373 30.7 3,554 JIMMA 1 750 - - 1
ADAMA 1,413 11,000 3,208 29.2 4,621 SHASH. 1 750 - - 1
WOLITA 847 11,000 2,982 27.1 3,829 WOLITA 1 750 - - 1
HAWASA 1,958 11,000 2,565 23.3 4,523 D.DAWA 1,000 - -
TS NR/NT - 18 - 18 TS NR/NT - 341 - 341
9,23 200,00 110,67 26,75
55.3 119,912 215 1,556 5.8 1,771
Total 6 0 6 Total 0
5.4. Outsourcing
With the aim of focusing on the banks’ major activities, some non-core services had been
identified to be gradually outsourced so that the bank would focus on areas related to banking
competencies.
Accordingly, processes had been underway with the Ethiopian Postal Service Enterprise to
outsource Mail & Courier Services; and RFP had been underway for outsourcing of Promotion
& Audiovisual Service. The contract management tasks had also been underway on Security
and Cleaning services; which had already been outsourced few years ago.
42
6. HUMAN RESOURCES MANAGEMENT
The total number of permanent employees of the bank had reached 18,524, recording 23.4%
increment during the fiscal year under review. On the other hand, a total of 430 employees
had left the bank on different grounds.
Table 32: Permanent Staff Strength
2012/13 Variation Variation

Jun 30, 2014
Ending against Plan: against 2012/13:
Particulars
Actual Plan (Annual) Abs. % Abs. %
1 2 3 4=1-2 5=4/2*100 6=1-3 7=6/3*100
Staff Strength 18,524 18,480 15,007 44 0.2 3,517 23.4
Recruitment (+) 3,905 4,004 2,879 (99) (2.5) 1,026 35.6
Attrition (-) 430 531 656 (101) (19.0) (226) (34.5)
Re-instated (+) 27 - 12 - - 15 125.0
Out of the total attrition, the resignation during the review period had been 228 employees,
the professionals’ category taking 61% share.
Table 33: Attrition by cause

2013/14 Annual Last Yr Same Period
Particulars
Actual % Share Plan % Share Actual % Share
Resigned 228 53.0 305 57.5 423 64.5
Deceased 31 7.2 11 2.1 29 4.4
Dismissed 56 13.0 8 1.5 50 7.6
Suspended 20 4.7 40 7.5 10 1.5
Detained 23 5.3 5 0.9 8 1.2
Pensioned 55 12.8 129 24.3 52 7.9
Early Retirement 3 0.7 4 0.8 3 0.5
Disappeared 5 1.2 24 4.5 4 0.6
Left on probation 9 2.1 5 0.9 77 11.7
Total 430 100.0 531 100.0 656 100.0
From the resignation on the professional category, the new entrants [below 5 years of
service] depicted a higher tendency to resign as depicted in table 34 below.
Table 34: 2013/14 Annual Resignation (In Numbers)
Job Category Service Years
43
%age
0-5 6-10 11-20 21-30 31-35 36-40 > 40 Total
Share
Administrative 3 16 18 6 4 4 - 51 22
Professional 69 20 27 6 5 11 - 138 61
Clerical 10 2 1 1 - - - 14 6
Transport & Production 4 - - - - 1 - 5 2
Service 3 2 2 4 4 5 - 20 9
Total 89 40 48 17 13 21 - 228 100
Apart from the usual HRM routine discussed in the preceding paragraphs, the bank had also
revisited all branch managers during the second quarter of the year to curb the indicative
ethical issues identified through various incidents. Accordingly, evaluation had been
conducted on branch managers on the grounds of performance, technical and leadership
capability, as well as ethical conduct; and 52 branch managers – which had been found in
problem in this regard – had been demoted from their positions.
Furthermore, ethical conduct, performance, technical knowledge and team spirit of

performance of staff of some processes i.e. Credit, Facilities, LLR and Trade Services processes
had been evaluated and measures had been taken accordingly.
Trainings
A total of 15,478 employees had participated in various technical and developmental training
programs during the fiscal year under review as depicted in the table below.
Table 35: Summary of Trainings & Education 2013/14 Annual

(In Number)
No of Participants Variation
NO Types of Program Absolut
Actual Plan
e %age
1 Technical 14,207 14,328 (121) (0.8)
By Districts 12,676 12,723 (47) (0.4)
By HRD 1,531 1,605 (74) (4.6)
2 Developmental 1,271 555 716 129.0
Total 15,478 14,883 595 4.0
44
7. CAPITAL BUDGET UTILIZATION
A total capital budget of birr 1.8 billion had been approved for the 2013/14 fiscal year under
review. The overall utilization level had accordingly reached 60.2% of the total budget as at
June 30, 2014.
Table 36: Capital Budget Utilization

(In '000 Birr)
2013/14 Annual Performance Against Budget
Particulars Absolute Utilization
Actual Budget
Variation Level (In %)
Const. & Maintenance Projects 319,781 338,430 (18,649) 94.5
Procurement 633,499 1,134,780 (501,281) 55.8
IT Projects 116,014 291,811 (175,797) 39.8
E-Payment 7,283 23,329 (16,046) 31.2
Total 1,076,577 1,788,350 (711,773) 60.2
7.1. Construction & Maintenance Projects

Of the total budget allotted for the 2013/14 fiscal year [birr 338.4 million], birr 319.8 million
[94.5%] had been utilized during the period as depicted in the table below.
Table 37: Construction and Maintenance Works

(In '000 Birr)
2013/14 Performance
2013/14 Annual
Against Budget:
Projects
Absolute Utilization
Actual Budget
Variation Level (in %)
Construction Projects 240,407 239,109 1,298 100.5
Constn Projects in A. Ababa (by CPO) 165,071 114,012 51,059 144.8
Constn Projects by FMP & Districts 75,336 125,097 (49,761) 60.2
Maintenance Works 17,721 21,233 (3,512) 83.5
Others * 61,653 78,088 (16,435) 79.0
Total 319,781 338,430 (18,649) 94.5
* Study & design works, new branches counter work and other need, ATM shelters, sentry
boxes and Muday bank boxes.
45
7.1.1. Construction Projects in Addis Ababa [coordinated by CPO 5]
Construction projects under CPO had utilized birr 165.1 million during the review period, which
had been above the budget by 44.8%.
Table 38: Status of Construction Projects under CPO

(In ’000 Birr)
Accomplishment
2013/14 Annual Cumulative
Estimated /Utilization
Project Status as at
Project Actual Plan (Actual vs. Plan)
Name June 30,2014
Cost Work Cost in Work Cost Work Cost
(Work in %)
in % Br in % in Br in % in Br
Rolled Over Construction
Megenagna 126,245 35.0 43,851 17 20,848 205.9 210.3 88.9
Paulos 65,720 28.2 32,471 31 20,673 91.0 157.1 77.2
Sebeta 14,666 - - 18 2,651 - - 100.0
New Constructions
Head Quarter - - - - 6,700 - - -
Bole Branch - - - - 15,400 - - -
Lideta Branch - 27.2 88,749 11 47,740 247.3 185.9 27.2
Total - - 165,071 - 114,012 - 44.8 -
Megenagna Building
The project is a 2B+SB+G+12 building constructed on a total plot area of 1,750 m 2. Most
finishing works have been done, but due to the change of the building function to training
center, the work had been pending until agreement would be finalized on the corresponding
furnishing tasks with the contractor.
Paulos Building
The project is a 2B+G+7 building being constructed on a total plot area of 807 m 2. So far, major
finishing works had been completed, though the project had been behind target due to poor
performance of the contractor [poor project management of the contractor and financial
problems].
Sebeta Building
The project is a B+G+3 building and the site has a total plot area of 1,472.5 m 2. The project had
been completed and inaugurated.
Head Quarter
The amount budgeted to this project had been for payment of annual lease, which hadn’t
been effected to date.
5 Construction Project Office
46
Lideta Building
The project is a 3B+G+M+11 building. The project site had been shifted inwards due to Addis
Ababa light rail way project that passes adjacent to the plot corner. So far, the following major
works had been performed:
 Title deed for the new plot area had been completed,
 Design & design modification had been underway,
 Excavation work and 3rd floor basement had been completed. For the 2nd
basement floor slab, column and shear wall works are started.
The project had also been behind schedule due to late selection of design review &
supervision consultant.
Bole Building
The project is 2B+G+M+10 building. The title deed for the 1,209m2 plot area had been secured
and boundary demarcation and fence work had been finalized during the year under review.
Bid had been floated to select contractor [including the design proposal] but had been
decided to rebid to get better & competitive design.
7.1.2. Construction Projects Coordinated by Facilities Management and Districts

A total of birr 75.3 million had been utilized by the construction projects coordinated by
Facilities Management and outlying districts. The utilization level had been 60.2% of the
budget for the 2013/14 fiscal year as depicted in the table below.
47
Table 39: Status of Construction Projects under FMP & Districts
(In 000 Birr)
%age Accomplishment
Estimated 2013/14 Annual Cumulative
/Utilization
Project Status as at
Project Name Actual Budget (Actual vs. Budget)
Cost June 30, 2014
Work Cost in Work Cost in Work Cost in
(‘000 Br) (Work in %)
in % ‘000 Br in % ‘000 Br Progress ‘000 Br
Rolled Over Constructions
Dawro Branch Office 6,525 27.0 1,762 27 1,740 100.0 101.3 100.0
Mille Branch Office 6,492 40.0 2,597 40 2,597 100.0 100.0 100.0
Awash 7 Killo Branch Office 3,755 65.0 2,441 65 2,441 100.0 100.0 100.0
Masha Branch Office 5,852 37.0 2,165 37 2,179 100.0 99.4 100.0
Finote Selam Branch Office 6,349 30.0 1,905 30 1,905 100.0 100.0 100.0
Shiraro Branch Office 8,052 43.0 3,462 43 3,462 100.0 100.0 100.0
Shashemene District Office 49,350 33.0 16,286 30 14,805 110.0 110.0 47.0
Adigrat Branch Office 26,631 30.4 8,104 35 9,321 86.9 86.9 94.4
Maichew Branch Office 3,250 70.0 2,275 100 3,250 70.0 70.0 70.0
Durame Branch Office 6,477 11.0 704 35 2,240 31.4 31.4 66.0
DireDawa District Office 51,527 23.3 12,006 33 16,746 70.6 71.7 48.3
Gondar District & Branch Office 57,000 25.0 14,250 30 17,100 83.3 83.3 37.0
Wolayta District Office 12,000 35.0 4,200 100 12,000 35.0 35.0 35.0
Woreta Branch Office 4,500 31.0 1,395 100 4,500 31.0 31.0 31.0
Debremarkos Branch Bldg - - - - 611 - - 0.0
Durame Branch Office Phase II 7,000 - - 20 4,200 - - 0.0
Sub Total 247,760 - 73,552 - 99,097 - 74.2
New Constructions
Hosana Branch 15,000 - - 30 4,500 - - 0.0
Debretabor Branch Office 15,000 10.1 1,509 50 7,500 20.2 20.1 10.1
FMP compound work 5,000 100 200 40 2,666 250.0 7.5 100.0
Combolcha Bldg 60,000 - 75 20 11,334 - 0.7 30.0
Total 342,760 - 75,336 - 125,097 - 60.2
Dawro, Mille, Awash 7 killo, Masha, Finoteselam & Shiraro: All of these six projects had been
finalized during the fiscal year.
Shashemene District Office: Performance of the project is progressing well above the target
and hence the budget utilization had exceeded the plan held for the period.
Adigrat Branch Office:

The implementation of the project did not pass 94% completion as additional construction
work is required to fulfill municipality’s regulation on percentage of built up area of the plot
which is 50%. Tender process is under way to hire a consultant for the design work.
Gondar district & Branch Office:

During the fiscal year, the project had been progressing well, though it had been behind
schedule in relation with giving details on the design requested by the contractor – since the
design was developed in-house by adapting from other designs. The problem was solved as
48
consultant was hired in the fourth quarter of the previous budget year and takeover the
supervision and contract administration to continue the project.
Durame Phase I & II Projects:

The status of the phase one (G+0 building) had previously been on finishing stage; however,
it could not go further due to the need for extending the building to phase II (from G+0 to G+2
building) as per the order of the town municipality, study had been conducted, specification
and bill of quantity was prepared and negotiation would continue based on the tender price
already obtained for additional work with the existing contractor.
Maichew Branch:
The construction lagged behind schedule due to prolonged process to solve problems raised
in relation to variation work which required repeated discussion, site visits and an
administrative decision.
Debertabor Branch:
The construction of the project was behind the schedule as the actual topography of the plot
after demolishing the existing building was found to be different from the expected one
during site assessment on design stage that forced to revise the design to include a basement.
The design revision work took additional time.
Combolcha Branch:
A standard architectural design was prepared in-house and approved for construction of G+5
building for this project and other similar projects. However, delay has been encountered in
bid finalization to select consultant to prepare additional designs (structural, electrical,
sanitary and BOQ) due to repeated appeals.
Diredawa District Office, Woreta Branch, Wolayta District: The work progress of these
projects had lagged behind schedules due to performance inefficiency of respective
contractors.
7.2. Procurement
A total of birr 1.1 billion had been allocated for procurement of capital items for the 2013/14
budget year. As illustrated in the table below, payment of birr 633.5 million [55.8% of the
annual budget] have been effected until June 30, 2014.
49
Table 40: Procurement Budget Utilization
(In 000 birr)
Annual Annual Budget Utilization
No Particulars 2013/14 Share Level
Amount
(Actual) (In %) (in %)
A Office Furniture and Equipment 195,931 436,597 38.5 44.9
Office Equipment 164,519 391,037 34.5 42.1
Office Furniture 31,412 45,560 4.0 68.9
B IT Equipment &Network Materials 148,159 197,424 17.4 75.0
IT Equipment 120,602 135,124 11.9 89.3
Eqpt for Core Banking Rollout Network
27,557 42,720 3.8 64.5
materials (Router and Switches)
IT equipment for Data Center 0 19,580 1.7 0.0
C E-Payment Channels & Equipment 62,227 202,174 17.8 30.8
ATMs (400) 45,195 106,390 9.4 42.5
POSs (7750) 10,262 79,186 7.0 13.0
Card Personalization Machine & Server 0 9,450 0.8 0.0
Server for Terminal Mgt System for POSs 500 500 0.0 100.0
Pin Mailer Printer 0 378 0.0 0.0
IPSEC device routers for ATMs 5,670 5,670 0.5 100.0
Small Server for ATM Monitoring 600 600 0.1 100.0
D Vehicle 227,182 298,585 26.3 76.1

Total 633,499 1,134,780 100.0 55.8
A. Office Equipment and Furniture

Office Equipment
50
The procurement of most items in this category is under process, the status of major items
being as described below:
 Payment effected for 250 KVA generator for data center, Wagner & metal detector
[birr 4.1 million];
 Delivery of small copiers completed and partial delivery received for fax machines.
Payment settlement is under process [birr 28 million];
 Procurement of big/medium size copiers, generator set for 250 KVA for IS and cash
box is waiting delivery [birr 18 million];
 Procurement of fax machines and metal detectors is under custom clearance [birr
5.8 million];
 Procurement of the retendered items [different note-counting machines, coin
counting machines and cash safes] is under post qualification assessment of winners
[birr 110.7 million];
 The procurement process of the remaining items had been at different stages.
 Procurement process of FCY detecting machine for value of 7 million reached post
qualification assessment stage,
 Procurement process of heavy duty note counting machines [birr 38.4 million], tellers note-
counting machines [birr 20 million], had been finalized and payment effected;
 Procurement of copy machines having value of birr 14 million had been under process.
 A total budget of 145.2 million had been transferred to the 2013/14 fiscal year budget, which
had been unutilized from previous year, and the procurement status for most items under
this category had reached at payment effected [birr 101 million] and delivery of generator
sets under progress for value of [birr 43 million] .
Furniture and Fittings

The procurement status of different types of items under this category, having a total budget
of birr 45.6 million had been as follows:
 Delivery had been completed for swivel arm chairs, teller stool, filing cabinets,
training tables and single pedestal desks [birr 31.4 million];
 Items waiting delivery include coffee tables, guest chairs, notice board and coat
hunger [birr 5.5 million];
 Items under retender process due to lack of qualified technical bidders include
executive secretarial desks, fireproof filing cabinets, suggestion boxes and wall to
wall shelves [birr 2.6 million].
 Additional Procurement of tellers tables for value of [birr 3 million] is waiting delivery and
procurement of teller stools for value of [ birr 3 million] is under process.
B. IT Equipment and Materials
51
Information Technology Equipment
The total budget of IT equipment was 135.1 million birr and procurement status of these items
had been as indicated below:
 Delivery of PCs, printers, heavy duty printer, scanners and UPS for data center had
been completed [birr 101.2 million];
 Procurement of LQ 590 printer had reached under custom clearance stage [birr 7
million];
 Procurement of different hard disks, and LQ 2190 printer is waiting delivery [birr 4.1
million];
 Procurement of blowers, color printers, cable testers, laptops, maintenance toolkit
and external 2TB HD had been retendered due to lack of qualified bidders [birr 2.9
million].
 Additional procurement of personal computers has been completed [birr 20 million].
Equipment for IS and CORE Banking Rollout

The total budget of equipment for IS and CORE banking rollout was birr 42.7 million. The
procurement status of items under this category at June 30, 2014 had been:
 Payment had been effected for patch panel 48 port, UTB cable , patch cord, CISCO
switches and Routers [birr 27.6 million];
 Most of the remaining items are awarded and under contract signing stage [birr 15.2
million].
Additional Budget Processed for Data Center IT Equipment

The Procurement process for Data center equipment and materials for which
additional budget was requested having a total value of birr 41.4 million had been:
 Procurement process of most data center equipment reached financial
evaluation stage [birr 19.6 million],
 Procurement process of Strong Room door & window reached technical
evaluation stage {birr 10.1 million]. The budget allocated was been included in
the building construction work of the respective projects.
C. E-payment Machines
A total of birr 202.1 million had been budgeted for these items and the procurement process
had reached the stages indicated below:
52
 Delivery completed for 200 ATMs is inspection undergoing [ birr 45.2 million partial
payment had been effected], first phase delivery completed from 3,750 POS machines
[and birr 10.3 million payment effected] and the remaining items are under clearance
stage;
 Technical evaluation completed and financial proposal opened [for 4000 POSs - having
a budget of birr 44.5 million];
 Technical evaluation completed and financial proposal opened for the procurement of
200 ATMs [worth birr 53 million];
 The procurement of card personalization machine had been awarded for the winner and
contract signing had been underway.
D. Vehicle
A total budget of birr 298.6 million had been allocated for the purchase of vehicles for the
2013/14 fiscal year (birr 181.3 for 2013/14 and birr 117.2 rolled over from previous year). The
procurement status had accordingly been as discussed below:
 The procurement of 32 L/C long wheel base [birr 69.1 million], 15 Hilux Double Cab [birr
26.5 million] and 4 METEC Pickup [birr 3.3 million] had been finalized and vehicles had
been delivered,
 The procurement of 26 METEC Pickup [worth birr 18.4 million] had been waiting
delivery,
 The Procurement of 46 LC long Wheel Base [birr 125.9 million] and 2 Isuzu [birr 2.4
million] had been finalized and delivery completed,
 The procurement of 8 automobiles [birr 5.6 million], 1 crane truck [birr 4 million] and 1
Forklift [birr 1.1 million] had been waiting delivery,
 The procurement of 15 pickups, 18 cash vans & 3 minivans [birr 42.3 million] had been
retendered due to lack of qualified bidders.
53
7.3. IT Infrastructure and E-Payment budget
7.3.1. IT Infrastructure (PMO)
From the total budget of birr 291.8 million allocated for CORE Banking projects, birr 116 million
[39.8%] had been utilized during the fiscal year under discussion. The payment includes
Interest free banking project payment of birr 8.3 million and payment of birr 107.7 million
made for IT security establishment project SOC (Security Operation Center), which is
underway in collaboration with INSA.
7.3.2. E-Payment
From the total budget of birr 23.3 million allocated for E-Payment, birr 7.3 million [31.2%] had
been utilized during the 2013/14 fiscal year as depicted in the table above. Among these,
upgrading the mobile banking service from R-11 to R-12 had been finalized during the fiscal
year so as to avail customers with smart phones of mobile-commerce functions, facilitate
USSD6 and deliver additional standard banking functions. The service went live through R-12
version on mid December 2013.
Table 41: Budget utilization of IT Infrastructure and E-Payment

(In, 000 Birr)
2013/14 Annual Utilization
Particulars
Actual Budget Level in %
IT Infrastructure (PMO) 116,014 291,811 39.8
Intranet System Deployment - 1,379
Call Center Hardware/software license & services2 - 20,685
ERP Solution - 77,100
Disaster Recovery Site Installation - 28,306
Interest Free Banking 8,284 6,582 125.9
Agent Banking - 28,207
Anti-Money Laundry - 9,523
Security Project with INSA 107,730 120,029 89.8
E-Payment 7,282.9 23,329 31.2
Magix Upgrade Project (Intangible asset) 2,029.4 14,579 13.9
Magix Upgrade for Master Card 1,158.9 3,863 30.0
Co-Branding & Loyalty 870.5 1,741 50.0
MX E-Commerce Acquiring - 2,035
Union Pay Card Acquiring - 2,035
Agent & Branch Banking - 4,905
Mobile Banking Upgrade Project (R12) 1,757.0 1,757 100.0
License Fees 1,359.0 1,359 100.0
Per-diem & Travel 398.0 398 100.0
DR Setup & Production Server Upgrade 3,496.5 6,993 50.0
Total 123,296.9 315,140 39.1
6
Unstructured Supplementary Service Data
54
8. MAJAOR WEAKNESSES, CHALLENGES AND WAYFORWARD
8.1. Major Areas of Improvement

Areas of Improvement Measures
 Lack of balanced focus on o Awareness creations through top management
major target areas. visits/discussions, workshop and trainings, and
 Gap in clarity towards deposit o Awareness creation and sensitization sessions at
mobilization strategy district and branch levels have been conducted.
implementation action plan.
o Efforts have been made to identify root causes of
 Disparity in performance levels performance gaps, corrective measures taken and
of branches and districts. scale up of best practices underway.
o Technical and Developmental trainings have been

 Shortage of skilled human delivered,
resource. o Coaching and experience sharing sessions had been
underway.
 Failure to give due attention o Close monitoring and coordination by the center have
for clearing reconciliation been conducted by establishing high level teams at
backlogs. CATS process.
8.2. Major Challenges

Challenges Mitigations
Mismatch in the streams of foreign o FCY mobilization action plan developed and
currency resource inflows & outflows. Implementation and follow up had been
underway,
o Performance of the private and saving deposit
have been improved, which helped to somehow
Liquidity challenges in relation to local compensate the underperformance in
currency due to the shortfall in Public cooperatives, public & Gov’t deposits,
Enterprises, Government and o Efforts have been made to minimize the gap
Cooperatives deposits. through bi-weekly fund management activities
of ALCO.
55
Failure on the side of some institutions to
lodge their credit and FCY requests per o Consultations with these institutions at higher
predetermined schedules (usually they levels have been made.
exceed allocated loan and FCY payment
amounts).
o Weekly monitoring of E-Payment strategy
Low level of public awareness in using E implementation had been started,
payment products and services. o Aggressive promotions, public education and
providing incentives have been underway.
Mal practices of some banks in the areas of o Consultations with NBE had been ongoing.
exports and FCY cash purchases.
o Consultations with Ethio Telecom had been
Frequent network/ connection failure, ongoing,
Frequent power interruptions. o Generators have been provided for Branches.
o A study has been conducted to maintain CBE’s

stake in Addis Ababa city and actions have been
taken as per the recommendations of the study.
 Workshop/Trainings focusing on corporate
thinking and service quality have been
Growing competition in financial resource conducted and would continue in the
mobilization. coming periods,
 Implementations of the remaining
recommendations of the study would also
continue through the action plan drawn for
it.
56
8.3. Way Forward
To bring about further improvements on the accomplishment levels in targets of the
upcoming 2014/15FY, the following points shall be given due focus among others:
1. Resource Mobilization (Deposits and FCY earnings):
 Enhanced focus on deposits mobilization with particular emphasis on those
branches and districts that registered continuous underperformances
against target;
 Conducting an assessment / a study on the root causes of continuous
underperformances against resource mobilization targets of Hawassa,
Nekemte and Wolaita districts and searching for areas of support from
center in this regard;
 Enhanced focus on FCY mobilization through proper implementation of the
FCY mobilization action plan;
 Reviewing the financing procedure of the private manufacturing sector and
establishing criteria for credit allocation,
 Enhanced implementation of the E Payment Strategy through the weekly
sessions of the E Payment Strategy Steering Committee established around
the close of the fiscal year;
 Conducting aggressive promotion and awareness creation through
electronic and print media.
2. Human Resource:
 Delivery of trainings [developmental; technical and ethical] at all levels to
address the prevailing skill and competency gaps;
 Finalizing individual target setting of the performance management system
and continuing with full-fledged implementation in this regard;
 Enhanced focus on the implementation of the remaining HRD strategies
[Career and Succession Planning and Technical Assistance].
3. Asset Quality:
 Finalizing the suspense and reconciliation backlog clearance and meeting
standards in these regard.
57
9. CONCLUSION
The overall performance results of the fiscal year in relation to the deposit mobilization
[particularly on private and saving deposits – on which the bank had relatively higher
influence] had been encouraging, which needs further enhancement of efforts to sustain and
step-up the results gained so far.
The performance levels depicted in relation to loans and bonds collection had also been
favorable; which made the local currency demand and supply of the year under review better
than anticipated.
The earnings in foreign currency, on the other hand, had been below plan; which entailed
purchase of foreign currency from NBE so as to meet the payment commitments, though
performance improvements had been registered after implementation of the FCY
mobilization action plan beginning from the month of November 2013 onwards.
Maintaining balanced focus on major target areas shall, accordingly, be the priority focus of
the new fiscal year so as to sustain the results in deposit mobilization, enhance the
performance levels in FCY mobilizations, enhance the E Payment and HRD strategy
implementations and expedite the finalization of the suspense clearance and reconciliation
backlogs.
58
Contents
1. EXECUTIVE SUMMARY ........................................................................................................... 1
2. ECONOMIC HIGHLIGHT ......................................................................................................... 5
3. FINANCIAL PERFORMANCES ................................................................................................ 8
3.1. Financial Resource Mobilization.............................................................................. 8
3.1.1. Deposits.................................................................................................................... 8
3.1.2. FCY Earnings........................................................................................................... 18
3.1.3. Collections .............................................................................................................. 21
3.2. Financial Resources Allocation ...............................................................................21
3.2.1. FCY Payments......................................................................................................... 21
3.2.2. Disbursement ......................................................................................................... 22
3.3. Other Financials..................................................................................................... 24
3.3.1. Outstanding Loans and Bonds .............................................................................. 24
3.3.2. Non Performing Loans........................................................................................... 24
3.3.3. Suspense Accounts Management ........................................................................ 26
3.3.4. Income, Expenses and Profit ................................................................................ 27
3.3.5. Balance Sheet......................................................................................................... 30
3.3.6. Performance Indicators......................................................................................... 32
4. NON-FINANCIALS................................................................................................................. 34
5. GRAND INITIATIVES..............................................................................................................35
5.1. Deposit Mobilization Strategy................................................................................35
5.2. Human Resources Development [HRD] Strategy ..................................................38
5.3. Accessibility ............................................................................................................39
5.4. Outsourcing........................................................................................................... 42
6. HUMAN RESOURCES MANAGEMENT ................................................................................ 43
7. CAPITAL BUDGET UTILIZATION.......................................................................................... 45
7.1. Construction & Maintenance Projects ...................................................................45
7.2. Procurement ......................................................................................................... 49
8. MAJAOR WEAKNESSES, CHALLENGES AND WAYFORWARD ...........................................55
8.1. Major Areas of Improvement ................................................................................55
8.2. Major Challenges ...................................................................................................55
8.3. Way Forward.......................................................................................................... 57
9. CONCLUSION ....................................................................................................................... 58
Appendices
Annexes
59
Appendices
Appendix 1: The Deposit Mobilization Strategy Implementation Action Plan
Appendix 2: The FCY Mobilization Action Plan Implementation Performance
60
Annexes
61

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COMMERCIAL BANK OF ETHIOPIA

Major Areas of Improvement

o Technical and Developmental trainings have been

o Close monitoring and coordination by the center have

Failure on the side of some institutions to

o Weekly monitoring of E-Payment strategy

o A study has been conducted to maintain CBE’s

2.2 DOMESTIC ECONOMY

Table 1: Incremental Deposits

3.1.1.2. Deposits Positions

Table 2: Deposit Positions

3.1.1.3. District Level Performances in Deposit Mobilization

Table3: Incremental Deposits by Districts

3.1.1.4. Major Initiatives taken

A. Top Management Discussions/Trainings

B. Identifying Root Causes for Performance Gaps

1. Weaknesses in looking inwards for identifying weaknesses and working towards

3. Recognizing efforts and activities instead of results on performance discussions;

C. Improving the Performance Disparity among Districts/Branches

Table 4: Branches Performances in Private Deposit as at Dec 31, 2013

Existing Accomplishment levels: Below June 30, 2013

 Weaknesses in properly developing branch level deposit mobilization action plan of

Table 5: Branches Performances in Private Deposit as at June 30, 2014

D. Framework for Resource Mobilization Teams

E. CBE’s Stake Analysis in Addis Ababa City

F. New Products & Services

Table 6: IFB Windows service Deposits

Table 7: Youth and Women Saving Accounts

Youth Savings Total 70,229 83,515 26,689 25,607 1,141 1.300

G. Customer Base Expansion

Table 8: Deposits Customer Base Expansion

3.1.2. FCY Earnings

Table 9: Foreign Currency Receipts

 Undertaking aggressive promotion and awareness creation;

 Enhancing service efficiency; and

To continuously track improvements and mitigate challenges and weaknesses, performance

Table 10: Foreign Currency Receipts

3.1.2.1. FCY Earnings Market Share

Table 11: Eleven Months Foreign Currency Earning Market Share

Table 12: Collections

3.2. Financial Resources Allocation

Table 13: Details of FCY Payments /Outflows/

Table 14: Breakdown of Loans and Bonds Disbursement

3.3. Other Financials

Table 15: Outstanding Loans, Advances and Bonds

3.3.2. Non Performing Loans

Table 16: Status of Non-Performing Loans

Jun 30, 2014 Jun 30, Variations

Table 18: Major NPLs Outstanding at the end of 2013/14 FY

No Name of Borrower Sector Balance Status of NPL

3.3.3. Suspense Accounts Management

Table 19: Long Outstanding Receivable Suspense

Table 20: Total Outstanding Receivable Suspense

3.3.4. Income, Expenses and Profit

Table 21: Summary of Income

Commission and Charges

Net Gain on Foreign Exchange

Table 22: Summary of Expenses

Salaries and Benefits

C. Profit before tax

Table 23: Profit Summary

3.3.5. Balance Sheet

Table 24: Assets Position