Bunna International Bank S.C. (BIB) 10
ANNUAL REPORT
For the Year that Ended Addis Ababa on June 30, 2019 Ethiopia Bunna International Bank S.C. (BIB) Vision Statement “To become one of the top three commercial banks in Ethiopia by the year 2030.” Mission Statement “To provide commercial banking services to enhance values of key stakeholders and win public trust using professional employees and state- of- the- art technology”
Core Value statements
•• WINNING: We have a strong conviction to outperform the banking competition in an ethical manner; by striving for excellence and exercising highest level of professionalism.
•• RESPECT: We respect each other’s value, differences and contributions to our customers, our shareholders, ourselves, our vendors, and our community. We also recognize that everyone is important and has a role to play. We focus on support, collaboration and care while we treat our customers, shareholders, regulatory body and the society.
•• RESPONSIBILITY: We act responsibly to balance the interest of our stakeholders. ANNUAL REPORT
Bunna International Bank S.C. (BIB)
ANNUAL REPORT For the Year that Ended on June 30, 2019
Addis Ababa Ethiopia
1 Bunna International Bank S.C.
Bunna International Bank S.C. (BIB) 10
ANNUAL REPORT
For the Year that Ended Addis Ababa on June 30, 2019 Ethiopia CONTENT
The Board Chairperson’s Message ...... 6 The Chief Executive Officer Message ...... 8 The Board of Directors’ Report...... 10 Auditor’s Report...... 19 Income Statement ...... 27 Balance Sheet...... 28 Statement of Change in Equity ...... 29 Statement of Cash Flows ...... 30 Notes to the Financial Statements ...... 31 Designed & Printed by
አራት ኪሎ :. +251 111 557 788 ገርጂ :. +251 116 298 777 * 31362 አዲስ አበባ ኢትዮጵያ
2 Graph5: Foreign Currency Mobilization
250 194 200
150 121 98 98 100 80
In Million USD ANNUAL REPORT 44 53 33 50 19 25
Performance Highlights over 0 the Past TenYears Performance Highlights over the Ten Past Years June June June June June June June June June June (F.Y. 2009/10-2018/19)-‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 Performance Highlights(F.Y. 2009/10 over -‐ 201 the 8/19) Ten Past Years
Graph1: Graph1: Deposit Deposit (F.Y. 2009/10 -‐2018/19) Graph6:Graph6: Branch Branch Network Network Graph1: Deposit 250 205 18000 200 16000 171 18000 14000 138 16000 12000 9947 10586 150 14000 10000 102 7532 10586 12000 8000 9947 5385 100 80 10000 6000 7532 60 In Million Birr In Million 3501 8000 In Number 4000 2152 5385 6000 903 1548 50 33
In Million Birr In Million 21 2000 239 491 3501 11 4000 0 1548 2152 4 491 903 2000 June 239 June June June June June June June June June 0 0 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 June June June June June June June June June June June June June June June June June June June June -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 -‐50
Graph2: Loans & Advance Graph7: Paid-‐Up Capital Graph2:Graph2: Loans Loans & & Advances Advance Graph7: Paid-Up Capital 12000 12000 2000 10000 1771 8281 1800 10000 1600 1475 8000 6942 8281 2000 1771 1400 8000 6942 1800 6000 5250 1600 1200 1475 2000 1010 5250 1771 6000 3675 1800 1400 1000 In Million Birr In Million 4000 686 2446 3675 1600 1200 800 1010 1475 In Million Birr In Million In Million Birr In Million 508 4000 1000 600 2000 950 1360 2446 1400 417 366.3 652 800 253 308 686 192.2 1360 1200 400 169 213 1010 2000 652 950 Birr In Million 508 0 192.2 366.3 1000 600 200 417 253 308 686 0 June June June June June June June June June June 800 400 0 169 213
In Million Birr In Million 508 June -‐10 June -‐11 June -‐12 June -‐13 June -‐14 June -‐15 June -‐16 June -‐17 June -‐18 June -‐19 600 200 June June June June 417 June June June June June June 0 253 308 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 400 169 -‐10 213 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 200 June June June June June June June June June June 0 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19
Graph8: Staff June June Strength June June June June June June June June Graph3: Graph3: Graph3: Gross Gross Profit Profit before Tax before Tax Graph8: Number-‐10 -‐11 of-‐12 Permanent-‐13 -‐14 -‐15 Staff-‐16 -‐17 -‐18 -‐19 Graph8: Staff Strength 2500 700 Graph8: Staff Strength 700 625 2500 2000 600 600 1709 2500 500 2000 500 427 1396 1709 1500 400 2000 1167 1396 400 294 1500 1709 294 938 1167 300 250 1000
300 In Number 182 747 938 1396 182 1500 1000
200 In Number 550 200 107.6 747 1167 80.3 107.6 385 In Million Birr In Million 80.3 500 263 550 938 In Million Birr In Million 100 26.8 41.3 1000 208 385 100 0.05 41.3 In Number 747 0.05 26.8 500 119 263 0 208 550 0 119 June June June June June June June June June June 500 0 385 -‐100 June June June June June June June June June June 208 263 -‐100 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 0 119 June June June June June June June June June June -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 June -‐10 June -‐11 June -‐12 June -‐13 June -‐14 June -‐15 June -‐16 June -‐17 June -‐18 June -‐19 -‐200 0 -‐200 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 June June June June June June June June June June Graph9: Number -‐10 -‐11 -‐12 of -‐13 Depositors -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 Graph9: Number of Depositors Graph4: Graph4: AssetAsset Graph9:Graph9: Number Number of of Deposit Depositors Accounts Graph4: Asset 700 700 25000 541 25000 700 600 600 541 20000 600 500 500 541 20000 14495 500 400 400 349 349 15000 13021 14495 15000 13021 400 300 300 242 242 349 9841 9841 175 175 10000 300 200 200 242 10000 6830 124 124 In Million Birr In Million 175 Number in Thousand 6830 Number in Thousand 77 77 In Million Birr In Million 4500 200 100 44 44 124 4500 100 13 13 25 25 5000 3012 Number in Thousand 77 5000 2129 3012 100 44 480 781.4 1365 2129 0 0 13 25 480 781.4 1365 0 0 June June June June June June June June June June June June June June June June June June 0 June June June June June June June June June June June -‐11 -‐11 June -‐12 -‐12 June -‐13 -‐13 June -‐14 -‐14 June -‐15 -‐15 June -‐16 -‐16 June -‐17 -‐17 June -‐18 -‐18 June -‐19 -‐19 June -‐10 June -‐11 June -‐12 June -‐13 June -‐14 June -‐15 June -‐16 June -‐17 June -‐18 June -‐19 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19
Graph5: Foreign Currency Mobilization Graph5: Foreign Currency Mobilization
250 194 200
150 121 98 98 80 100 In Million USD 44 53 33 50 19 25
0 June June June June June June June June June June -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19
Graph6: Branch Network
250 3 205 200 171 138 150 102 100 80 60 In Number 33 50 21 4 11 0 June June June June June June June June June June -‐50 -‐10 -‐11 -‐12 -‐13 -‐14 -‐15 -‐16 -‐17 -‐18 -‐19
Graph7: Paid-‐Up Capital Board of Directors
Sewale Abate (Dr) Chairperson
W/ro. Demekech Gerawork Ato Zewdu Belete Ato Endeg Zegeye Ato Habtamu Ayele Vice Chairperson Director Director Director
Ato Sangeorge Desalegn Ato Solomon Gebreyesus Ato Gedefaw Mehari W/ro Muludesta Workneh Director Director Director Director (Bunna Insurance Representative)
Ato Mulatu Kibret Ato Molalegn Melese Ato Yigrem Kinde Ato Bekalu Ayalew Director Director Director Board Secretary
4 Executive and Senior Management
Ato Mulugeta Alemayehu Chief Executive Officer
Ato Demelash Demissie Ato Solomon Jebessa Ato Eskezia Mengestie Ato Wolelaw Birhane Chief Resource Management Officer Chief Strategy Officer Chief Operation Officer Chief Information Technology Officer
Ato Gizachew Amare Ato Yohannes Gulelat Ato Yohannes Emiru Ato Wubetu Assefa Ato Tegenu Hailu Director, Human Resource Director, Finance Director, Internal Audit Director, Legal Service Director, Risk Management Management Directorate Directorate Directorate Directorate and Compliance Directorate
Ato Binyam Tilahun Ato Tewodros Baleh Ato Tesfaye Gezahagn Ato Tadese Dabi Ato Emishaw Tefera Director, Credit Director, Core Application Director, Corporate Director, Infrastructure and Director, E-Banking Directorate Directorate Planning and Change SecurityDirectorate Directorate Management Directorate
Ato Mekbib Tola Ato Tenna Hailemariam Ato Sewale Bitew Ato Lewtie Tirusew Director, Procurment Director, International Director, Marketing Director, Domestic and Facility Management Banking Directorate Directorate Banking Operations Directorate Directorate
Ato Abebaw Zewdie Ato Abayneh Habtie Manager, Corporate Executive Assistant to CEO Communication & Promotion Division
5 Bunna International Bank S.C.
The Board Chairperson’s Message
Esteemed Shareholders a challenge to the national economy in general and business environment in particular. On behalf of the Board of Directors and myself, it is a great pleasure to share with you the commendable In addition, the competition within the domestic performance of our Bank for the year ended June banking industry, especially in-terms of financial 30, 2019. I would also like to seize this opportunity resource mobilization, securing branch office to congratulate our venerated Shareholders, the buildings and retaining capable staff has been Board of Directors, the Management, the staff stiffened further during the just concluded fiscal and the entire Bunna International Bank family on year. Moreover, it is also worth noting that there our 10th year anniversary which is decorated with was a change of leadership in the Bank whereby uninterrupted and sustainable growth. new Chief Executive Officer was appointed and new Board of Directors were elected. Despite the unusually capricious and unstable local conditions, the Bank has witnessed yet Despite all these challenges, however, the Bank's another improved financial performance in revenue grew by Birr 441 million (31.7%) well 2018/19 budget year. This is mainly attributed to above the last year performance and reached Birr the unrelenting support of our Customers, the 1.83 billion. In effect, the Bank has managed to concerted effort of the staff, and the integrated attain a record high profit of Birr 625 million before leadership demonstrated by the Management and tax, up by 46.4 percent over the preceding fiscal Board of Directors of the Bank. year. While achieving this commendable result, the Bank followed a prudent business practice The global economy has been in a synchronized ensuring loan quality; with a non-performing loans slowdown; its slowest pace since the global (NPLs) ratio of 3.86 percent, which is well below financial crisis. Idiosyncratic factors, among the maximum regulatory requirement of five others, have been causing macroeconomic strain percent. The Bank has also continued to expand in several emerging and developing countries its service outlets in Addis Ababa and regional where Ethiopia has been part of it. In the domestic towns by opening additional 34 new branches and space, on the other hand, the Country experienced increased its total number of branches to 205. The unprecedented political and social unrest that puts
6 Bunna Gold Checking Account www.bunnabanksc.com ANNUAL REPORT
effort of the Bank to expand its outreach has also supporting different Government’s development been enhanced further by introducing alternative initiatives, the Bank extended a financial support banking channels; namely Mobile and Internet to those citizens who are affected by the political banking services. and social unrest in the Country. In another development, the Bank has purchased a Looking forward, our center of attention in the next G+3 building in Bahir Dar town and has continued fiscal year shall be on institutionalizing the new its concerted effort to acquired additional land to Strategic Plan by building the Bank’s institutional construct it Headquarter buildings in Addis Ababa capabilities, organizational culture and systems and other regional towns. for the proper implementation of the plan. On top of that, the Bank shall focus on expediting the During the fiscal year 2018/19, the Board of process of constructing its Headquarter building Directors’ conducted a number of ordinary and and acquiring additional land and other assets. extraordinary meetings and has passed vital decisions and provided clear directions in support Finally, on behalf of the Board of Directors and on of the Management’s effort to win the stiff my own behalf, I would like to express my heartfelt competition prevailing in the Banking Industry. gratitude to our staff and the Management team Ensuring prudent banking practices, responsibility for their strong commitment and tenacious and accountability with proper empowerment leadership. I am also indebted to our Shareholders has been one of the top agenda of the Board of and Customers without whom the registered Directors since day one. To this end, the Board performance would have not been possible to has prepared and implemented a comprehensive attain. Moreover, I am grateful to the National Bank Corporate Governance Policy Framework by which of Ethiopia for their guidance and support. the day to day operation of the Bank shall be well In conclusion, I would like to assure our esteemed guided and managed. Shareholders that we will perform our duties Moreover, a new Five Year Strategic Plan that professionally and exert our utmost effort to covers the fiscal year 2019/20 to 2023/24 has been capitalize on every opportunity and mitigate every prepared and approved. The new Strategic Plan is challenge we face so as to realize the vision that we crafted to bring a profound change in key areas have set for Bunna International Bank. that will transform the Bank’s business model. In kind Regards; the process, the Bank has set a new strategic vision statement that is “to become one of the top three commercial banks in Ethiopia by the Year 2030”. Accordingly, the mission and value statements have been reviewed with new strategic pillars and objectives. Esteemed Shareholders Sewale Abate (Dr.) Bunna International Bank has continued upholding Chairperson, Board of Directors’ its values by discharging its social responsibilities as a corporate citizen. Accordingly, on top of
Bunna Bank Gold checking account: you will earn a better ofer depending on the amount you put in your 7 account. To qualify, a minimum deposit of Birr 100,000 is required. Bunna International Bank S.C.
The Chief Executive Officer’s Message
It is indeed an honor to present Bunna International The 2018/19 fiscal year was also successful in Bank S.C’s annual report for the year concluded terms of operationalizing Mobile, Internet and June 30, 2019 for the Bank’s esteemed Shareholders Agent Banking services. The acceptance by in particular and for all stakeholders in general. the customers is encouraging. I encourage our During the concluded fiscal year, our Bank was esteemed shareholders to experience these digital able to see yet another year on year performance Banking services and appreciate the efficiency and boost and was able to achieve more than the effectiveness it brings. net income before tax target (104%). Given the Moreover, the Bank is finalizing all the necessary political instability in the country, severe shortage preconditions to operationalize Interest Free of foreign currency and the stiff competition in the Banking services to our large potential customer Banking industry, the result achieved is remarkable base by deploying state-of-the art technologies. and encouraging. We believe that this new service will address large During the 2018/19 fiscal year, our Bank has number of potential customer base. developed a five year strategic plan (2019/20- Another key strategic decision taken during the 2023/24) which will help it to get prepared for the 2018/19 fiscal year was shifting the structure of ever increasing competition ahead. The strategy deposit from expensive time deposit to a cheaper has clearly pointed out in which areas the Bank will and stable saving deposit. Accordingly, the focus so as to leverage its competitive position. It composition of deposit has shifted to 75% saving is the strong conviction of the management that deposit, 23% current deposit and 2% time deposit the new strategy will create clarity on the future against last year 59 % saving deposit, 22% current direction as well as unity of purpose among all deposit and 19% time deposit. The Bank has key stakeholders in general and among Board also managed its guarantee commitment which of Directors, Management and Employees in reached about Birr 3.3 billion, showing a reduction particular. of Birr 1.2 billion against last year same period.
8 Deposit Account for Investment www.bunnabanksc.com ANNUAL REPORT
As part of its commitment to comply with more than we achieved during the last ten years national as well as international laws, the Bank has and prepare itself for next expected competitive successfully adopted IFRS 9 starting from 1st of environment. In line with that, we will focus and July, 2018. Since the necessary preparations were invest on leadership development as well as done in the Bank’s internal process and systems, technical skill upgrading since we have strong the implementation of this new standard in the net conviction that sustainable success will be achieved profit of the Bank was positive. with professional leaders and employees. Another key focus area of the Bank during Finally, I would like to extend my heartfelt gratitude the 2018/19 fiscal year has been adequate for the unreserved support by our customers, the capitalization so as to build the confidence of our wise leadership of the Board of Directors of our key stakeholders. Accordingly, the Bank’s paid up Bank, the commitment of the Management team capital during the period July 1, 2018 to June 30, and dedication of the employees of our Bank for 2019 grew by about Birr 296.352 million (20.1%) as the significant success we achieved so far. The compared to last year and stood at about Birr 1.8 National Bank of Ethiopia, as always, continues to Billion at the end of the fiscal year. This achievement contribute to our safe and sound operation. I am reflects the strong commitment and confidence confident that the support and engagement of that the shareholders have on our Bank. our key stakeholders will continue for the years to come. During the fiscal year, a total of 34 branches were opened and the total number of branches stood at Once again, I would like to congratulate the 205. Out of the total 205 Branches, 99 are located shareholders on the 10th year anniversary of our in Addis Ababa; while the remaining 106 branches Bank. I hope the future is bright and let us exploit are found in regional towns. our potential by exploiting our large shareholders base and strong brand image. During the year, the Bank has acquired three storey building that can be used for North-west district office and branch, at Bahirdar. For the years to come, acquisition of Head Office building in Addis Ababa and other buildings in major cities will be carried out. Mulugeta Alemayehu It is my firm belief that the new five year strategy Chief Executive Officer (2019/20-2023/24) will help our Bank to advance
Is intended to encourage enterprises to accumulate capital for future plan of business expansion, purchase 9 of machineries etc. To be eligible, a minimum deposit of Birr 1,500 is required; and in return customers will gain a competitive ofer. THE BOARD OF DIRECTORS REPORT (F.Y. 2018/19) On behalf of the Board of Directors of Bunna reached USD 12.4 billion, narrow by USD International Bank S.C., it is a great honor and 100 million from the previous fiscal year pleasure to present the Annual Report of the deficit balance (National Bank of Ethiopia). Bank for the fiscal year ended June 30, 2019 to all esteemed stakeholders. 1.5 The slowdown in export performance during the fiscal year was mainly driven Highlights of the major performance of the Bank by continued decline in price of major during the 2018/19 fiscal year are summarized agricultural export commodities at world hereunder. market, illegal trade, relatively higher domestic price particularly for coffee and 1. MACROECONOMIC DEVELOPMENTS prevailed social unrest.
1.1 Global economic growth is forecasted to 1.6 Cash remittance received from private be 3 percent in 2019; its lowest level since individuals living abroad was USD 2.9 2008-09. Advanced economies growth billion, up by USD 200 million or 7.4 is projected to contract to 1.7 percent in percent against last year’s amount of USD 2019 from 2.3 percent in 2018. Emerging 2.7 billion. and developing economies are also projected to be 3.9 percent in 2019, lower 2. HIGHLIGHTS OF OPERATIONAL from 4.5 percent in 2018. Meanwhile, Sub- PERFORMANCE Saharan African economies achieved 3.2 percent growth in 2018 and it is projected BIB has registered the fiscal year 2018/19 to remain same in 2019 (IMF: World performance in the face of various challenges Economic Outlook Report, October 2019). like economic slowdown mainly associated with the social unrest prevailed in most part of 1.2 The Ethiopian economy has achieved the country. Moreover, severe foreign currency a growth of 7.7 percent in 2017 and shortage that was emanated from weak export estimated to attain about 9.0 percent in and remittances performance at the national 2018 and a double digit in 2019 (Source: level was also another challenge facing the MOFEC Ethiopia). On the other hand, IMF Ethiopian banking industry. estimated Ethiopia’s economic growth to be 7.7 percent during FY 2018-19. 2.1. Deposit Mobilization
1.3 Domestic inflation (year-on- year) was The outstanding deposit balance of the Bank 14.7 percent at the end of June 2018 and has reached Birr 10.59 billion at the end of June further escalated to 16.7 percent at the 2019, above last year performance by Birr 639 end of June 2019 (Source: CSA). million (6.4%).
1.4 The amount of foreign currency While looking at the composition of deposits, generated from export during the fiscal savings deposit continued to constitute the year 2018/19 stood at USD 2.67 billion, largest share (75%) followed by demand (23%) below the preceding year receipt of USD and time deposits (2.0%). The sharp decline in 2.8 billion by 4.6 percent or USD 130 share of time deposits was due to bank’s strong million. Similarly, the total import bill of direction to clear time deposits for a healthier the country declined by USD 200 million fund structure. dSimilarly, BIB expanded its or 1.3 percent and reached USD 15.1 number of deposit accounts by 192,509 (55.0%) billion. Accordingly, trade deficit balance during the reviewed fiscal year and stood at
10 Minor’s Trust Deposit Account www.bunnabanksc.com ANNUAL REPORT 541 thousand at the end of June 2019. Out The Bank has extended loans and advance
of these accounts,Bunna International about Bank94.10 S.C. percent were to different businesses that are engaged in saving deposit accounts; 5.89 percent were various economic sectors. The composition of 201demand9. Out of depositthese accounts accounts, about 94.10 and percent the were remaining savings deposit loans and advances comprises: Import & Export account0.01 percents; 5.89 percent were were dtimeemand depositdeposit account accounts.s and the remaining 0.01 (37.7%), Building & Construction (20.3%), percent were time deposit accounts. Domestic Trade and Services (14.1%), Transport
Fig.1: Deposit by Type & Communication (8.0%), Industry (7.0%), Staff Loan (4.4%), Agriculture (0.07%), and other sectors accounted for the remaining 8.5 percent of the total loans and advance.
Fig.3: Composition of Loans & Advances by Bunna International Bank S.C. Economic Sector During FY2018/19
2.2. Loans2.2. and Loans Advances and Advances At the end of the reporting period, BIB’s outstanding loans and advances stoodAt theat Birr 8.28end billion, of upthe by Birr reporting 1.3 billion (19 .2 period,percent) from BIB’s last year sameoutstanding period. The yearly loans increment and on advances loans and advances stood has been at achievedBirr in8.28 the facebillion, of the prevailingup by Birr27% NBE1.3 billbillion policy. (19.2%)So far, the outstandingfrom balancelast year of NBE same Bill purc period.hased by the The Bank yearly stood at Birr increment 3.26 billion at onthe end of June 2019. loans and advances has been achieved in the In addition, the Bank has been able to maintain a health loan portfolio which is Regarding the type of loan products, term loan constituted the largest portion face of the prevailing 27% NBE bill policy. So far, Inattributed addition, to its theprudant Bank loan mangementhas been practi ablece. The to Bank’s maintain Non- (64.6%) of the total loan portfolio of the Bank followed by revolving credit the outstanding balance of NBE Bill purchased Performing Loans (NPL) was 3.86 percent as at the end of June 30, 2019, which (20.6%) and overdraft (14.8%). a ishealth below the loan5 percent portfolio maximum regulatory which requirement is attributed set by the National to its Inby relation the Bankto the composition stood at of termBirr-loans, 3.26 BIB billion has continued at the to allocate end the prudentBank of Ethiopia loan. management practice. The Bank’s highestof June share 2019. of its term loans to medium-term loans (49.2%), followed by 2.3.Non-Performing International Banking Operation Loans (NPL) was 3.86 percent
short and long term loans, which make up 37.0 and 13.8 percent, respectively. Regarding the type of loan products, term loan asThe at Bank the has end mobilized of foreignJune currency 30, 2019, worth of whichUSD 194.6 wasmillion belowduring thethe FY5 percent2018/19, up by maximum USD 73.4 million regulatory(60.0%) as compared requirement with last year. constituted the largest portion (64.6%) of the This performance was achieved despite subdued export earnings at national Annualtotal Report loan 2018 /1portfolio9 of the Bank followed by setlevel by and the the stiff National competition in Bank the industry of Ethiopia.in-relation to foreign currency mobilization. 9 revolving credit (20.6%) and overdraft (14.8%). 2.3. International Banking Operation In relation to the composition of term-loans, BIB Subsequent to the registered foreign currency performance, income from international banking activities stood at Birr 403.1 million, up by 90 percent or has continued to allocate the highest share of TheBirr 191.0Bank million has from mobilized what was achieved foreign in the preceding currency fiscal year. worth In an its term loans to medium-term loans (49.2%), ofeffort USD to enhance 194.6 its international million banking during service deliverythe FY to its 2018/19, customers followed by short and long term loans, which and thereby generate more foreign currency, the Bank was able to provide upinternationa by USDl remittance 73.4 services million through (60.0%) 10 internationally as compared renowned make up 37.0 and 13.8 percent, respectively. For with last year. This performance was achieved compliance Bunnareason, International the Bank Bank is S.C. working to raise Annualdespite Report 201 subdued8/19 export earnings at national the share of short-term loans to 40 percent. 11 For compliance reason, the Bank is working to raise the share of short-term level and the stiff competition in the industry loansFig.2: to 40 Loans percent. and Advances by Economic Sector in-relation to foreign currency mobilization.
Subsequent to the registered foreign currency performance, income from international banking activities stood at Birr 403.1 million, up by 90 percent or Birr 191.0 million from what was achieved in the preceding fiscal year. In an effort to enhance its international banking service delivery to its customers and thereby generate more foreign currency, the Bank was able to provide international remittance services through 10 internationally renowned
The Bank has extended Loans and Advance to different businesses that are engaged in various economic sectors. The composition of loans and advances 11 Is comprisesintended: Import to encourage & Export (3 parents/guardians7.7%), Building & Construction to save ( money20.3%), in the name of their children /under age of 18 years/Domestic for T futurerade and use. Services Customers (14.1%), T ransportopening & C thisommunication account (8.0 will%), earn a better ofer plus other benefts. Industry (7.0%), Staff Loan (4.4%), Agriculture (0.07%), and other sectors account for the remaining 8.5 percent of the total loans and advance.
Annual Report 2018/19 10 Bunna International Bank S.C. Bunna International Bank S.C. remittance companies via its 205 branches Fig.4: Revenu by Source that are distributed in different corners of the country. Moreover, the Bank has continued strengthening the lottery scheme that is Bunna International Bank S.C. designed for remittance service customers and found a promising result during the 4th and 5th round lottery scheme conducted during the fiscal year under review. The scheme will further
be enhanced during the years to come. As compared with last year, the share of interest income on loans and advancesAs compared dropped by 4 .with0 percentage last points year, during the the sharefiscal year ofwhile interest the The Bank has continued its international shareincome of non- interest on incomeloans grew and proportionally. advances dropped by banking business relationship with 4.0 percentage points during the fiscal year correspondent Banks. So far, the Bank is working while the share of non- interest income grew with seven correspondent Banks. The issue of proportionally.As compared with last year, the share of interest income on loans and getting prominent additional correspondent advances dropped by 4.0 percentage points during the fiscal year while the banks has been a challenge to the banking Fig.5:share of nonComposition- interest income ofgrew Revenue proportionally. by Source During industry in general, mainly associated with the FY 2018/19 the country’s categorization in sanction list following money laundry issue.
BIB will strengthen its effort to look for additional 3.2. Expenses correspondent banks, on top of enhancing its Total expense of the Bank (including impairment losses on loans, relationship with additional NGOs, international amortization & depreciation) went up by Birr 243.0 million (25.2%) and organizations and the diasporas community, in Annual Report 2018/19 order to improve its foreign exchange earnings.13 3. FINANCIAL PERFORMANCE 3.2. Expenses 3.1. Revenue 3.2. Expenses TotalTotal expense expense of the of theBank Bank(including (including impairment impairment losses on loans , Total revenue of the Bank grew by Birr 441 lossesamortization on & depreciationloans, amortization) went up by Birr 243& .0depreciation) million (25.2%) and went up by Birr 243.0 million (25.2%) and stood million (31.7%) during the fiscal year under Annual Report 2018/19 review and reached Birr 1,833.0 million at the13 at Birr 1,208 million at the end of June 2019. end of June 30, 2019. This achievement was Interest expense constituted the largest share mainly attributed to the growth registered in all (36.4%) and grew by 13.1 percent (Birr 51.0 revenue sources. million) year-on-year. Constituting a share of 33.2 percent, salary & benefits expense also The largest revenue source was interest income rose by 40.2 percent or Birr 115.0 million; and on loans (70.0%) followed by fees generated general expense (26.2% share) increased by from commission (11.4%) and services (11.3%). 28.0 percent or Birr 69.0 million. The lion’s share Other incomes (gain from foreign exchange from the total general expense (about 39% or operations, plus other sources) also accounted Birr 123 million) was office rent expense. for 7.3 percent of total revenue generated during the reporting period. The growth in total expenses during the fiscal year under review was mainly driven by growth in deposit balance, widening work volume and ever escalating office rent coupled with branch expansion of the Bank.
12 Special Purpose Deposit Account www.bunnabanksc.com Bunna International Bank S.C.
stood at Birr 1,208 million at the end of June 2019. Interest expense constituted the largest share (36.4 percent) and grew by 13.1 percent (Birr 51.0 million) year-on-year. Constituting a share of 33.2 percent, salary & benefits expense also rose by 40.2 percent or Birr 115.0 million; and general expense (26.2 percent share) increased by 28.0 percent or Birr 69.0 million. The lion’s share from the total general expense (about 39 percent or Birr 123 million) was office rent expense.
The growth in total expenses during the fiscal year under review was mainly driven by growth in deposit balance, widening work volume and ever escalating office rent coupled with branch expansion of the Bank. ANNUAL REPORT Fig.6: Expense by Type year and reached at Birr 2.57 billion at the end
of June 2019. Paid-up capital, which constituted 68.9 percent of the total capital, went up by Birr 296.3 million or 20.1 percent during the just ended fiscal year and reached Birr 1.77 billion. The increase in paid up capital was due to additional shares sold to existing shareholders. 4. BUSINESS DEVELOPMENT AND OTHER ADMINISTRATIVE ISSUES 3.3.3.3. Profit Profit and Loss and Accounts Loss Accounts The Bank keeps its growth momentum and has witnessed another year of 4.1. Multi-Channel Banking Services commendable performance in the area of profit. Accordingly, BIB has The Bank keeps its growth momentum and registered Birr 625.0 million profit before tax during the reviewed period, BIB’s services continue to be delivered through has witnessedup by Birr 198.0 million another or 46.4 percent year over of the commendableprevious fiscal year. This performancegrowth in profit in was the the resultarea of ofsurge profit. in all income Accordingly, categories, the a range of alternative banking channels, targeting different segment of customers. BIB Annual has Report registered 2018/19 Birr 625.0 million profit before Accordingly, our customers use our physical or 14 tax during the reviewed period, up by Birr 198.0 million or 46.4 percent over the previous fiscal digital outlets at their convenience. year. This growth in profit was the result of 4.1.1 Branch Expansion surge in all income categories, the concerted effort of the Bank to manage its liquidity and As branch expansion plays major role in proper management of controllable expenses. increasing accessibility, resource mobilization The EarningBunna Per ShareInternational of the Bank Bank S.C. reached Birr and expand service outreaches, the Bank has 28.7 per 100 Birr at end June 2019. exerted its utmost effort to expand its branch concerted effort of the Bank to manage its liquidity and proper management network during the review period. As a result, 34 ofFig.7: controllable Gross expenses. Profit new branches in various locations (22 branches in Addis Ababa and 12 branches in outlying towns) have been opened, which increased the total number of Bank branches to 205 at the end of June 2019.
4.1.2 Digital Banking
ATM and POS
BIB has continued to provide digital banking services apart from its branches through 3.4. Asset 3.4. Asset Automated Teller Machine (ATMs) and Point AtAt the the end end of June of 30, June 2019, 30, tota l 2019,assets of total the B ankassets reached of atthe Birr 14.5 of Sale (POS) located at selected branches of bBankillion, exceeding reached the at preceding Birr 14.5 year’s billion, amount exceedingby Birr 1.47 billion the or 11.3 the Bank and other convenient commercial percent.preceding Net loans year’s and amountadvances took by the Birr lion’s 1.47 share billion, constituting or 57 areas. Accordingly, the Bank added up 4 ATMs percent of the total asset. 11.3 percent. Net loans and advances took the and 13 POS machines into the market during 3.5. Capital the reviewed period. Consequently, the total Tlion’sotal capital share, of the constituting Bank, which consists 57 of percent Paid-up capital, of the Legal total and Special number of ATMs and POS of the Bank have Reserveasset. and Retained Earnings increased by Birr 585 million (29.5%) as compared with the preceding fiscal year and reached at Birr 2.57 billion at reached 49 and 34, respectively at the end of the3.5. end ofCapital June 2019 . Paid-up capital, which constituted 68.9 percent of the June 2019. Out of the total ATMs, 71 percent are total capital, went up by Birr 296.3 million or 20.1 percent during the just deployed in Addis Ababa while the remaining Total capital of the Bank, which consists of Paid- ended fiscal year and reached Birr 1.77 billion. The increase in paid up 29 percent are in regional towns. capitalup capital, was due to Legal additional Reserve, shares sold Special to existing shareholders.Reserve and
Retained Earnings increased by Birr 585 million The number of personalized debit cards issued
(29.5%) as compared with the preceding fiscal to the Bank’s esteemed customers increased by
Annual Report 2018/19 15 Is designed for customers who want to save for special purposes like weeding, graduation, vacation etc; 13 and help customers earn a better ofer. The minimum amount of deposit required to open the account is Birr 200. Bunna International Bank S.C. 22,786 cards or 153 percent during the fiscal permanent staff to fill various job positions. year under review and stood at 37,665 cards at Accordingly, the total number of permanent the end of June 2019. employees of the Bank increased to 1,709 at the end of June 2019. The number of outsourced Mobile and Internet Banking non-clerical employees of the Bank also reached BIB has commenced its mobile and internet 1,811. This surge in staff size is mainly as a result banking service at full scale after successfully of the branch expansion and increased work completing its pilot testing and securing volume of the Bank. approval from the National Bank of Ethiopia As BIB always believes, to keep on competing in (NBE) during the reviewed year. Consequently, the dynamic banking industry and to sustain the about 2,640 customers have started using the growth trajectory, the presence of qualified and Bank’s mobile and/or internet banking services well trained staff has a paramount importance. as at June 30, 2019. To this end, the Bank has continued giving due Mobile and internet banking services have attention on recruiting competent professionals enabled the Banks retail and corporate from the market and thereby developing their customers to operate their accounts from skills and knowledge with on-the-job and anywhere at anytime. relevant short-term trainings. In-effect, the Bank has invested around Birr 14.0 million for staff Agency Banking training and development programs during the period ended June 30, 2019. Accordingly. BIB has fulfilled all the necessary requirements 732 staff of the Bank attended various short and got approval from NBE to conduct its pilot term trainings organized by different local testing during the just ended fiscal year. Work is and international institutions. On top of these, on progress to recruit agents that are capable following its customary practice, the Bank has of rendering the service on behalf of the Bank. been extending its financial support for its Hence, the full scale implementation of agent employees who are pursuing their education at banking service will be finalized and shall start different institutions. operation during the first half of the fiscal year 2019/20. 4.4 Five Year Strategic Plan
4.2 Interest Free Banking Fiscal Year 2018/19 was the 3rd year implementation period of the 2nd Five Year Interest Free Banking service is growing rapidly Strategic Plan of the Bank. As a common all over the world. According to industry practice of conducting mid-term review and analysis, the local demand for the product is also due to significant changes in the internal also very high. Bunna International Bank S.C., and external environment, the Bank validated with its strong determination to cater targeted the relevance of the existing FYSP against the customers, has finalized all the necessary existing environment. As a result of the review preparation and requested approval from NBE process, a new FYSP stretching from the FY to provide this service during the reviewed year. 2019/20 to 2023/24 is prepared with a new The Bank named its interest free banking as Vision, Mission and Value statements. “BUN” which means “Coffee Bean” in Arabic. In the meantime, the Bank is training its staff and The new Strategic Plan is designed to bring getting prepared to provide efficient and sharia about profound change in key areas that will compliant products since the first quarter of the help the Bank to transform its business model fiscal year 2019/20. and overcome future challenege and thereby win the competition. 4.3 Human Resource
During the year under review, BIB recruited 551
14 Star Demand Deposit Account www.bunnabanksc.com ANNUAL REPORT 4.5. Building Acquisition 4. Expedite the process of acquiring land and constructing Headquarter and other Acquiring Headquarter and other buildings office buildings in Addis Ababa and other in Addis Ababa and other regional towns is regional towns. very important not only for image building but also to enhance organizational efficiency and effectiveness. To this end, the Bank has 6. RECOMMENDATION ON purchased a G+3 building located in Bahir APPROPRIATION OF THE PROFIT Dar town to be used as a district and branch offices. The Bank is also in search of a building After making appropriate tax deduction from to purchase in the capital city to be used as the gross profit earned during the fiscal year a Head Office. Work is also on progress to 2018/19, Bunna International Bank S.C. was acquire additional land from Addis Ababa City able to generate a net profit of Birr 461,368,000. Administration. However, after transfer of Birr 112,992,000 to Legal reserve accounts in the current year 4.6 Corporate Social Responsibility and other deductions made, the Board of Directors recommends the General Assembly Beyond the provision of financial services, of Shareholders that Birr 350,208,000 to be BIB up-holds its values even under difficult distributed as dividend. circumstances and challenges. Discharging its social responsibility is one of such values of BIB that it neither compromise nor negotiate. 7. PRESENTATION OF THE FINANCIAL Apart from paying around Birr 163.7 million as STATEMENTS income tax to the government, it has continued to extend donations and contributions to The Financial Statements of the Bank comprising different development activities of the society. the Balance Sheet, the Profit and Loss Account, In line with this, during the fiscal year 2018/19, and the Cash-Flow Statement together with the the Bank has donated, among others, to Notes to the Financial Statements are appended displaced people following social unrest in herewith. The Board of Directors is honored to different parts of the Country. It also donated present the External Auditors Report for the to Addis Ababa City Administration project on fiscal year 2018/19 (hereafter Auditors’ Report). greenery of riversides. The Bank will continue As always, we would like to take this discharging its social responsibility during the opportunity to extend our earnest thanks and years to come. acknowledgement to the National Bank of 5. STRATEGIC INITIATIVES AND THE WAY Ethiopia for the unreserved support we have FORWARD received during the concluded fiscal year. We believe that this support has a significant The following issues shall be the major focus contribution to our safe and sound operation areas of the Bank which are going to be and in-effect to the achievements we have implemented during the fiscal year 2019/20. registered during the year.
1. Institutionalizing the new Five Year Strategic Plan;
2. Restructuring the Bank in line with the new Strategic Plan; Sewale Abate (Dr.) 3. Enhance the Bank’s internal capabilities Chairperson, Board of Directors’ in terms of technology, human capital, systems and process to ensure the proper implementations of the new Strategic Plan;
is designed for government and public organizations. Customers will get a 1% interest and above. To 15 qualify a minimum of Birr 100,000 deposit is required. For deposits exceeding Birr 200,000, the Bank will ofer a Door-to-Door services for the customer. Picture Gallery
A Partial View of BIB's 9th Ordinary General Meeting of Shareholders
A Partial View of BIB's Managment Annual Performance & Five Year Strategic Plan Review Meeting
2nd Round Bajaj & Taxi and 5th Round Remmittance Lottery Winners
16 Salary Drawing Account www.bunnabanksc.com Picture Gallery
Belsty Negessa and His Children Trading PLC
Nile Steel Factory
Ethio Best Realestate
Meserat Yaskeberal Market Center Helen Building
Salaried staf of an organization or a company are eligible customers. Customers 17 will enjoy from free commission charge for their local money transfers. Picture Gallery Some of Newly Opened Branches
CMC MICHALE Branch SEALITE MIHRET Branch
GURDSHOLA Branch
BOLE FLAMINGO Branch CHURCHIL Branch
18 AUDITOR’S REPORT
AUDITORS’ REPORT For the Year Ended 30 June 2019
19 Bunna International Bank S.C.
Bunna International Bank Share Company Annual Report For the Year Ended 30 June 2019
20 AUDITOR’S REPORT BunnaBunna International International Bank Share Bank Company Share Company Directors,Directors, Senior Senior Managements, Managements, professional professional advisers andadvisers registered and office registered office For the year ended 30 June 2019 For the Year Ended 30 June 2019
Directors Date of appointment Dr. Sewale Abate Chairperson, Board Of Directors February 8, 2019 W/ro Demekech Gerawork Vice chairperson, Board Of Directors February 8, 2019 Ato Zewudu Belete Director February 8, 2019 Ato Endeg Zegeye Director February 8, 2019 Ato Habtamu Ayele Director February 8, 2019 Ato Sangeorge Desalegn Director February 8, 2019 Ato Solomon G/eyesus Director February 8, 2019 Ato Gedefaw Mehari Director February 8, 2019 W/ro Muludesta Workneh Director February 8, 2019 Ato Mulatu Kibret Director February 8, 2019 Ato Molalegn Melesse Director February 8, 2019 Ato Yigrem Kinde Director February 8, 2019 Ato Bekalu Ayalew BOD's Secretary July 1, 2016
Senior Managements Ato Mulugeta Alemayehu Chief Executive Officer September 1, 2018 Ato Demelash Demissie Chief Resource Management Officer March 10, 2018 Ato Solomon Jebessa Chief Strategy Officer October 22, 2018 Ato Eskezia Mengestie Chief Operation Officer October 22, 2018 Ato Wolelaw Birhane Chief Information Technology Officer October 22, 2018 Ato Gizachew Amare Director, Human Resource Management Directorate July 15, 2009 Ato Yohannes Gulelat Director, Finance Directorate September 1, 2009 Ato Yohannes Emiru Director, Internal Audit Directorate December 20, 2012 Ato Wubetu Assefa Director, Legal Service Directorate November 24, 2011 Ato Tegenu Hailu Director, Risk Management and Compliance Directorate June 19, 2018 Ato Binyam Tilahun Director, Credit Directorate December 5, 2018 Ato Tewodros Baleh Director, Core Application Directorate December 5, 2018 Ato Tesfaye Gezahagn Director, Corporate Planning and Change Management December 5, 2018 Ato Tadese Dabi Director, IT Infrastructure and Security Directorate December 5, 2018 Ato Emishaw Tefera Director, E-Banking Directorate December 5, 2018 Ato Mekbib Tola Director, Property and Facility Management Directorate December 5, 2018 Ato Tenna Hailmariam Director, International Banking Directorate December 20, 2018 Ato Sewale Bitew Director, Marketing Directorate June 29, 2019 Ato Lewtie Tirusew Director, Domestic Banking Operations Directorate August 1, 2019
Independent auditor TAY & Co. Chartered Certified Accountants and Authorised Auditors Addis Ababa Ethiopia Corporate office Daber building Near Birhanena Selam Printing Press Arat Kilo Addis Ababa, Ethiopia Principal bankers KCB Bank of Kenya Bank of Africa Mer Rouge-Djibouti ECO Bank -Paries Bank of Beirut-UK Bank of Beirut S.A.L CYP Bank of Beirut-Lebanon CAC International Bank-Djibouti Exim Bank Djibouti Aktif Bank Turky National Bank of Ethiopia Bank of Abyssinia Dashen Bank Zemen Bank Enat Bank
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21 BunnaBunna International International Bank S.C. Bank Share Company BunnaReport International of the Directors Bank Share Company ReportFor the of theyear Directors ended 30 June 2019 For the Year Ended 30 June 2019
The directors submit their report together with the financial statements for the period ended 30 June 2019, to the members of Bunna International Bank Share Company. This report discloses the financial performance and state of affairs of the Bank.
Incorporation and address Bunna International Bank SC. was incorporated on 17th of June 2009 in accordance with the commercial code of Ethiopia 1960, and it was licenced by the National Bank of Ethiopia on June 25, 2009 to transact commercial banking.
Principal activities The Bank’s principal activity is commercial banking.
Results and dividends The Bank's results for the year ended 30 June 2019 are set out on page 7. The profit for the year has been transferred to retained earnings. The summarised results are presented below.
30 June 2019 30 June 2018 Birr'000 Birr'000 Interest income 1,281,948 1,032,553 Interest expense (439,801) (389,398)
Profit before income tax 625,031 427,228 Income tax expense (163,664) (111,965) Profit for the year 461,368 315,263
Other comprehensive income net of taxes 11,119 (3,612) Total comprehensive income for the year 472,487 311,651
Directors The directors who held office during the year and to the date of this report are set out on page 2.
Dr Sewale Abate Chairperson, Board Of Directors Addis Ababa, Ethiopia
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22 Bunna International Bank Share Company AUDITOR’S REPORT BunnaStatement International of Directors' Bank Share Responsibilities Company StatementFor the yearof Directors’ ended Responsibilities 30 June 2019 For the Year Ended 30 June 2019
In accordance with the Banking Business Proclamation No. 592/2008, the National Bank of Ethiopia (NBE) may direct the Bank to prepare financial statements in accordance with International Financial Reporting Standards, whether their designation changes or they are replaced, from time to time.
The Bank's Directors are responsible for the preparation and fair presentation of these financial statements in conformity with International Financial Reporting Standards and in the manner required by the Commercial Code of Ethiopia of 1960, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Bank is required to keep such records as are necessary to:
a) exhibit clearly and correctly the state of its affairs;
b) explain its transactions and financial position; and
c) enable the National Bank of Ethiopia to determine whether the Bank had complied with the provisions of the Banking Business Proclamation and regulations and directives issued for the implementation of the aforementioned Proclamation.
The Bank's Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards, Banking Business Proclamation, Commercial code of Ethiopia 1960 and the relevant Directives issued by the National Bank of Ethiopia.
The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the company and of its profit or loss.
The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.
Nothing has come to the attention of the Directors to indicate that the company will not remain a going concern for at least twelve months from the date of this statement.
Signed on behalf of the Directors by:
Dr. Sewale Abate Ato Mulugeta Alemayehu Chairperson, Board Of Directors Chief Executive Officer 14-Nov-19 14-Nov-19
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23 Bunna International Bank S.C. Bunna International Bank Share Company IndependentIndependent Auditors’auditor’s reportReport To the shareholders of Bunna International Bank S.C. To the shareholders of Bunna International Bank S.C For the Year Ended 30 June 2019
Opinion We have audited the financial statements of Bunna International Bank S.C, which comprise the statement of the financial position as at 30 June 2019, and the statement of comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements present fairly, the financial position of the Bunna International Bank S.C as at 30 June 2019 and its financial performance, and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). We have no comments to make on the report of the Board of Directors of the Bank in so far as it relates to these financial statements and pursuant to Article 375 of the Commercial Code of Ethiopia 1960 recommend approval of these financial statements. Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ code of Ethics for Professional Accounts (IESBA Code) together with the ethical requirmets that are relevant to our audit of the financil statmetns in Ethiopia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. During the financial year the bank has adopted several newly issued IFRS standards including IFRS 9 which had impact on comparative figures as well as opening balances of the previous year.Proper assessment and recognition of the impactshave been considered as key audit matters for our audit during the year. We obtained management’s working for the assessment of the impact and evaluated the reasonableness of key assumptions and accuracy of the workings.
24 AUDITOR’S REPORT Bunna International Bank Share Company Independent Auditors’ Report To the shareholders of Bunna International Bank S.C. Responsibilities of the Management and those Charged with Governance for the Financial For the Year Ended 30 June 2019 Statements
The management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of a Company’s report that is free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the project report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise form fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
25 Bunna International Bank S.C. Bunna International Bank Share Company Independent Auditors’ Report To the shareholders of Bunna International Bank S.C. For the Year Ended 30 June 2019
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonable be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statement of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Mr Tesfa Tadesse, MSc, FCCA.
TAY Authorized Addis Ababa Accountants & Auditors 14November 2019
26 Bunna International Bank Share Company AUDITOR’S REPORT BunnaStatement International of Profit Bank orShare Loss Company and Other Comprehensive Income StatementFor the yearof Profit ended or Loss 30 and June Other 2019 Comprehensive Income For the Year Ended 30 June 2019
30 June 2019 30 June 2018 Notes Birr'000 Birr'000
Interest income 5 1,281,948 1,032,553 Interest expense 6 (439,801) (389,398)
Net interest income 842,147 643,154
Fee and commission income 7 415,351 260,749 Fee commission and expense
Net fee and commission income 415,351 260,749
Net gain on foreign exchange dealing & revalution 10 77,101 63,190 Other operating income 8 57,993 35,922
Total operating income 1,392,591 1,003,015
Impairment losses on loan & advances 9 (50,215) (40,738) Impairment losses on other financial assets 9 (630) (1,983)
Net operating income 1,341,745 960,293
Personnel expenses 12 (400,899) (286,299) Amortisation of intangible assets 20 (7,156) (6,283) Depreciation of property, plant and equipment 21 (32,800) (26,231) Administration and general expenses 11 (275,859) (214,253)
Profit before income tax 625,031 427,228
Income tax expense 13 (163,664) (111,965)
Profit for the year 461,368 315,263
Other comprehensive income (OCI) net on income tax
Items that will not be subsequently reclassified into profit or loss:
Remeasurement gain(loss) on Defined benefits obligations 26 (7,945) (5,160) Deferred tax liability/asset on remeasurement gain or 13 2,384 1,548 loss on defind benefit obligation Fair Value gain/loss-equity investment-FVOCI 16 16,681 sub total 11,119 (3,612)
Total comprehensive income for the period 472,487 311,651
Earnings per share of Ethiopian Birr,1000 29 286.94 286.11
The notes on pages 1112 to 7675 are an integral part of these financial statements.
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27 Bunna International Bank S.C. Bunna International Bank Share Company BunnaStatement International of Financial Bank Share Position Company StatementAs At 30 of June Financial 2019 Position For the Year Ended 30 June 2019
30 June 2019 30 June 2018 Notes Birr'000 Birr'000 ASSETS
Cash and bank balances 14 2,284,780 2,669,835 Loans and advances to customers (net) 15 8,149,331 6,841,603 Financial assets at fair value through OCI (2018-AFS) 16 63,813 42,002 Financial assets at amortized cost 16 3,259,397 2,872,237 Other financial assets and prepayments 17 387,856 364,729 Prepaid leasehold land 19 17,250 18,357 Intangible assets (net) 20 20,859 23,312 Property, plant and equipment (net) 21 310,189 170,839 14,493,474 13,002,914 Non-current assets held for sale 18 1,303 18,238
Total assets 14,494,776 13,021,152
LIABILITIES AND EQUITY
Liabilities Deposits from customers 22 10,502,724 9,153,261 Deposits from financial institutions 23 83,925 794,113 Borrowings 24 - 24,715 Current income tax liability 13c 165,246 94,976 Defined benefit obligation 26 21,724 11,554 Provisions 27 50,000 34,296 Deferred tax liability 13d 3,709 7,675 Other liabilities 25 1,098,599 917,143
Total liabilities 11,925,928 11,037,733
Equity Share capital 28 1,771,141 1,474,788 Share premium 28 16,938 14,454 Legal reserve 32 366,271 253,279 Special reserve 33 606 606 Regulatory risk reserve 34 56,762 39,158 Retained earnings 30 350,208 204,479 Other comprehensive income 31 6,921 (3,345)
Total equity 2,568,848 1,983,419
Total liabilities and equity 14,494,776 13,021,152
The notes on pages 1211 to 7675 are an integral part of these financial statements.
The financial statements on pages 7 to 75 were approved and authorised for issue by the Board of directors on 14 November 2019 and were signed on its behalf by:
Dr. Sewale Abate Ato Mulugeta Alemayehu Chairperson, Board Of Directors Chief Executive Officer
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28 AUDITOR’S REPORT Bunna International Bank Share Company Bunna International Bank Share Company Statement of Changes in Equity StatementFor the year of Changesended 30 in June Equity 2019 For the Year Ended 30 June 2019
Other comprehen Share Share Retained sive Legal Special Regulatory capital premium earnings income reserve reserve risk reserve Total Notes Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Birr'000
As at 1 July 2017 1,009,895 14,206 120,130 267 177,881 606 35,232 1,358,217 Additional shares ssued 28 464,893 248 465,141 Dividend declared (150,389) (150,389) - Profit for the period 30 315,263 315,263 Directors' share on profit (1,200) (1,200)
Re-measurement gains on defined (3,612) (3,612) benefit plans (net of tax) 26 Total comprehensive income - - 314,063 (3,612) - - - 310,451 for the period
Transfer to legal reserve 32 (75,398) 75,398 - Transfer to regulatory risk reserve 34 (3,926) 3,926 -
As at 30 June 2018 1,474,788 14,454 204,479 (3,345) 253,279 606 39,158 1,983,419
As at 1 July 2018 1,474,788 14,454 204,479 (3,345) 253,279 606 39,158 1,983,419 Adjustment on initial application of (400) (853) 21,397 20,144 IFRS-9 Restated balance as at 1 July 1,474,788 14,454 204,079 (4,198) 253,279 606 60,555 2,003,563 2018
Additional shares ssued 28 296,353 2,485 298,838 Dividend declared (204,479) (204,479) - Profit for the period 30 461,368 461,368 Directors' share on profit (1,560) (1,560) Change in fair value of equity investment through OCI (2018- 16 16,681 16,681 AFS) Re-measurement gains on defined (5,562) (5,562) 26 benefit plans (net of tax) Total comprehensive income - - 459,808 11,119 - - - 470,927 for the period
Transfer to legal reserve 32 (112,992) 112,992 - Transfer from regulatory risk 34 3,793 (3,793) reserve -
As at 30 June 2019 1,771,141 16,938 350,208 6,921 366,271 606 56,762 2,568,848
The notes on pages 1211 to 7675 are an integral part of these financial statements.
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29 Bunna International Bank Share Company Bunna International Bank S.C. Statement of Cash Flows BunnaFor the International year ended Bank 30 Share June Company 2019 Statement of Cash Flows For the Year Ended 30 June 2019
30 June 2019 30 June 2018 Notes Birr'000 Birr'000
Cash flows from operating activities Cash generated from operations 35 (707,600) 549,471 Interest received 1,281,948 1,032,553 Interest paid (439,801) (389,398) Benefit paid (1,375) (557) Income tax paid (94,976) (63,878)
Net cash inflow from operating activities 38,195 1,128,189
Cash flows from investing activities Investment in debt securities(NBE Bills & Bonds) (598,761) (1,009,133) Investment in shares (5,984) (5,632) NBE Bills collection/Redemption 211,438 167,847 Purchase of intangible assets 20 (4,703) (3,366) Purchase of property, plant and equipment 21 (173,299) (50,235) Proceeds from sale of property, plant and equipment 35 1,406 1,201 Payment for leasehold land (41) -
Net cash outflow from investing activities (569,943) (899,318)
Cash flows from financing activities Restricted balance held with NBE 14 (30,000) (130,000) Proceeds from issues of shares 298,838 465,141 Dividends declared (204,479) (150,389)
Net cash inflow from financing activities 64,358 184,752
Net increase(decrease) in cash and cash equivalents (467,389) 413,623
Cash and cash equivalents at the beginning of the year 14 2,145,120 1,668,307 Foreign exchange gains on cash and cash equivalents 77,101 63,190
14 Cash and cash equivalents at the end of the year 1,754,832 2,145,120
The notes on pages 1211 to 7675 are an integral part of these financial statements.
10
30 AUDITOR’S REPORT Bunna International Bank Share Company NotesBunna International to the Financial Bank Share Statements Company Notes to the Financial Statements For the year ended 30 June 2019 For the Year Ended 30 June 2019
1 General information
Bunna International Bank SC. Was incorporated on 17th of June 2009 in accordance with the commercial code of Ethiopia 1960, and it was licenced by the National Bank of Ethiopia on June 25, 2009 to transact commercial banking.
The Bank's registered address is as follows: Daber building Near Birhanena Selam Printing Press Arat Kilo Addis Ababa, Ethiopia
The Bank is principally engaged in the provision of commercial banking services.
2 Summary of significant accounting policies
2.1 Introduction to summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.2 Basis of preparation
The financial statements for the period ended 30 June 2019 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Additional information required by National regulations is included where appropriate.
The financial statements comprise the statement of profit or loss and other comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and the notes to the financial statements.
The financial statements have been prepared in accordance with the going concern principle under the historical cost concept, except for investment on equity and the defined benefit plans measured at fair value.
All values are rounded to the nearest thousand, except when otherwise indicated. The financial statements are presented in thousands of Ethiopian Birr (Birr' 000).
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Bank’s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate and that the Bank's financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.
2.2.1 Going concern
The financial statements have been prepared on a going concern basis. The management have no doubt that the Bank would remain in existence after 12 months.
11
31 Bunna International Bank Share Company Notes to the Financial Statements Bunna International a n Bank S.C. n
2.2.2 Changes in accounting policies and disclosures
Bank as n a a n n s an a s a a s ans n s n Bank n a n a a n a n s nan a s a n s as n n a n s a s n s
n a a n s s an a s s a n a n – an increase/decrease in impairment losses recognised on financial assets (Note 4.3.9); and – additional disclosures related to IFRS 9 (see Notes 2.6.1 and 4.3.9);
an s Bank as ns s n a a n n s as s n a s s n n s nan a s a n s
IFRS 9 Financial Instruments:
s s n s n s n an as n nan a ass s nan a a s an s n a s s n n nan a s s s an a a s nan a ns n s n n an as n n s s n a s n an an n s an a n s n a n a an s a n n nan a ass s an a n as s a n n nan a a s
s a s a n Bank as a ns n a a n n s s n a n nan a a n s s a a s n a n n s a n ss an n s n a a s n n s s Bank s s s a n n n s nan a s a n s na Bank as a ns n a a n n s nan a ns n s s s s a a a s s s a a n n a a a n a n
k an s Bank’s a n n s s n s a n a s a s a a n s an a s s n
Transition from IAS 39 to IFRS 9: an s n a n n s s n a n a n a s a a s a n a n n s a n s n a n a n s nan a ass s an nan a a s s n a n a n s n a n a n n s an a sk s s as a
n n a n s n s n n s an s n a a n a n s n n
Bank s n n s a a a s ns n a a n n s a n n s n ‘interest n a a s n n s rate’ as a s a a n n s a n ss an Bank an s n n ‘interest income’ reported in 2018 to ‘interest income calculated using the effective interest method’.
n ass ss n s a n a n as s a s an s an s a s a a n a a a n na n s n ss n a nan a ass s s na n an a n s s na ns a n nan a ass s an nan a a s as as a s na n n s n s n ns n s n a n as a a s a sk a a n a a a n n Bank as ass a sk n ass a n n as s n an s n s n a n n
32 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT For the ear ended 30 une 2019
IFRS 15 - Revenue from contracts with customers: IFRS 1 as issued in a 2014 and esta lishes a five step model to account for revenue arising from contracts ith customers. nder IFRS 1 revenue is recognised at an amount that reflects the consideration to hich an entit e pects to e entitled in e change for transferring goods or services to a customer.
his standard deals ith revenue recognition and esta lishes principles for reporting useful information to users of financial statements a out the nature amount timing and uncertaint of revenue and cash flo s arising from an entity’s contracts ith customers. Revenue is recognised hen a customer o tains control of a good or service and thus has the a ilit to direct the use and o tain the enefits from the good or service.
he standard replaces I S 18 ‘Revenue’ and I S 11 ‘Construction contracts’ and related interpretations. he standard is effective for annual periods eginning on or after 1 anuar 2018 and earlier application is permitted. o ever the adoption of IFRS 1 has no significant change in the Bank s revenue recognition and related disclosures.
2.3 New Standards, amendments, interpretations issued but not yet effective. num er of ne standards and amendments to standards and interpretations are effective for annual periods eginning after 30 une 2019 and have not een applied in preparing these financial statements. None of these is e pected to have a significant effect on the financial statements of the Bank e cept the follo ing set out elo
IFRS 16 - Leases his standard as issued in anuar 2016 ( ffective 1 anuar 2019) . It sets out the principles for the recognition measurement presentation and disclosure of leases. he o ective is to ensure that lessees and lessors provide relevant information in a manner that faithfull represents those transactions. he standard introduces a single lessee accounting model and re uires a lessee to recognise assets and lia ilities for all leases ith a term of more than 12 months unless the underl ing asset is of lo value. lessee is re uired to recognise a right of use asset representing its right to use the underl ing leased asset and a lease lia ilit representing its o ligation to make lease pa ments. it also su stantiall carries for ard the lessor accounting re uirements in I S 1 . he Bank is et to assess the e pected impact of this standard.
Amendments to Materiality Definition (IAS 1 & IAS 8): he International ccounting Standards Board (I SB) has issued efinition of aterial ( mendments to I S 1 and I S 8) to clarif the definition of ‘material’ and to align the definition used in the onceptual Frame ork and the standards themselves. he amendments are effective annual reporting periods eginning on or after 1 anuar 2020. he Bank is et to assess the e pected impact of this amendments.
2.4 Foreign currency translation
a) Functional and presentation currency Items included in the financial statements are measured using the currenc of the primar economic environment in hich the Bank operates ( the functional currenc ). he functional currenc and presentation currenc of the Bank is the thiopian Birr (Birr).
) Transactions and balances Foreign currenc transactions are translated into the functional currenc using the e change rates prevailing at the dates of the transactions. Foreign e change gains and losses resulting from the settlement of foreign currenc transactions and from the translation at e change rates of monetar assets and lia ilities denominated in currencies other than the Bank s functional currenc are recognised in profit or loss ithin other (loss)/income. onetar items denominated in foreign currenc are translated using the closing rate as at the reporting date.
ranslation differences on non monetar financial assets and lia ilities such as e uities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. ranslation differences on non monetar financial assets measure at fair value such as e uities classified as availa le for sale are included in other comprehensive income.
13
33 Bunna International Bank Share Company Notes to the Financial Statements orBunna t e International year en e Bank S.C. une
2.5 Recognition of income and expenses
Revenue is reco nise to t e e tent t at it is ro a le t at t e economic ene its ill lo to t e an an t e revenue can e relia ly measure re ar less o en t e ayment is ein ma e Revenue is measure at t e air value o t e consi eration receive or receiva le ta in into account contractually e ine terms o ayment an e clu in ta es or uty
2.5.1 Policy applicable from 1 July 2018
i) Effective interest rate and amortised cost
nterest income an e ense are reco nise in ro it or loss usin t e e ective interest met o e ‘effective interest rate’ is t e rate t at e actly iscounts estimate uture cas ayments or recei ts t rou t e e ecte li e o t e inancial instrument to t e ross carryin amount o t e inancial asset or t e amortise cost o t e inancial lia ility
en calculatin t e e ective interest rate or inancial instruments ot er t an cre it im aire assets t e an estimates uture cas lo s consi erin all contractual terms o t e inancial instrument ut not e ecte cre it losses or cre it im aire inancial assets a cre it a uste e ective interest rate is calculate usin estimate uture cas lo s inclu in e ecte cre it losses
e calculation o t e e ective interest rate inclu es transaction costs an ees an oints ai or receive t at are an inte ral art o t e e ective interest rate ransaction costs inclu e incremental costs t at are irectly attri uta le to t e ac uisition or issue o a inancial asset or inancial lia ility ii) Amortized cost and gross carrying amount e ‘amortized cost’ o a inancial asset or inancial lia ility is t e amount at ic t e inancial asset or inancial lia ility is measure on initial reco nition minus t e rinci al re ayments lus or minus t e cumulative amortisation usin t e e ective interest met o o any i erence et een t at initial amount an t e maturity amount an or inancial assets a uste or any e ecte cre it loss allo ance or im airment allo ance e ‘gross carryin amount o a inancial asset’ is t e amortise cost o a inancial asset e ore a ustin or any e ecte cre it loss allo ance
iii) Calculation of interest income and expense n calculatin interest income an e ense t e e ective interest rate is a lie to t e ross carryin amount o t e asset en t e asset is not cre it im aire or to t e amorti e cost o t e lia ility o ever or inancial assets t at ave ecome cre it im aire su se uent to initial reco nition interest income is calculate y a lyin t e e ective interest rate to t e amortise cost o t e inancial asset t e asset is no lon er cre it im aire t en t e calculation o interest income reverts to t e ross asis
or inancial assets t at ere cre it im aire on initial reco nition interest income is calculate y a lyin t e cre it a uste e ective interest rate to t e amorti e cost o t e asset e calculation o interest income oes not revert to a ross asis even i t e cre it ris o t e asset im roves
iv) Presentation nterest income an e ense resente in t e statement o ro it or loss an C inclu e interest on inancial assets an inancial lia ilities measure at amortise cost calculate on an e ective interest asis interest on e t instruments measure at C calculate on an e ective interest asis
nterest income an e ense on all tra in assets an lia ilities are consi ere to e inci ental to t e Bank’s tra in o erations an are resente to et er it all ot er c an es in t e air value o tra in assets an lia ilities in net tra in income
nterest income an e ense on ot er inancial assets an inancial lia ilities at are resente in net income rom ot er inancial instruments at
34 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT or t e ear ended ne
2.5.2 Policy applicable before 1 July 2018
i) Interest income and expense or a financia instr ments meas red at amortised cost interest income or e ense is recorded sing t e ffective nterest rate ic is t e rate t at e act disco nts estimated f t re cas a ments or recei ts t ro g t e e ected ife of t e financia instr ment or a s orter eriod ere a ro riate to t e net carr ing amo nt of t e financia asset or financia ia i it e ca c ation takes into acco nt a contract a terms of t e financia instr ment for e am e re a ment o tions and inc des an fees or incrementa costs t at are direct attri ta e to t e instr ment and are an integra art of t e ffective nterest ate t not f t re credit osses
e carr ing amo nt of t e financia asset or financia ia i it is ad sted if t e Bank revises its estimates of a ments or recei ts e ad sted carr ing amo nt is ca c ated ased on t e origina and t e c ange in carr ing amo nt is recorded as nterest and simi ar income for financia assets and nterest and simi ar e ense for financia ia i ities
nce t e recorded va e of a financia asset or a gro of simi ar financia assets as een red ced d e to an im airment oss interest income contin es to e recognised sing t e rate of interest sed to disco nt t e f t re cas f o s for t e r ose of meas ring t e im airment oss
ii) Fees and commission
ees and commission income and e enses t at are integra to t e effective interest rate on a financia asset or ia i it are inc ded in t e meas rement of t e effective interest rate t er fees and commission income etter of credit fees etter of g arantee iss ed fees etc are recognised as t e re ated services are erformed
en a oan commitment is not e ected to res t in t e dra do n of a oan oan commitment fees are recognised on a straig t ine asis over t e commitment eriod
t er fees and commission e enses re ates main to transaction and service fees are e ensed as t e services are received
iii) Dividend income
is is recognised en t e Bank’s rig t to receive t e a ment is esta is ed ic is genera en t e s are o ders a rove and dec are t e dividend
iv) Foreign exchange revaluation gains or losses
ese are gains and osses arising on sett ement and trans ation of monetar assets and ia i ities denominated in foreign c rrencies at t e f nctiona currency’s s ot rate of e c ange at t e re orting date is amo nt is recognised in t e income statement
e monetar assets and ia i ities inc de financia assets it in t e foreign c rrencies de osits received and e d on e a f of t ird arties etc
35 Bunna International Bank Share Company Notes to the Financial Statements Bunna r e International year en e Bank S.C. une
2.6 Financial Instruments - Initial Recognition and Subsequent Measurement
nanc a ns ru en s any c n rac a es r se a nanc a asse ne en y an a nanc a a y r e u y ns ru en an er en y
2.6.1 Policy applicable from 1 July 2018
i) Recognition and initial measurement e Bank s a n a y rec n e ans an a ances e s s e secur es ssue an nanc a a es n e a e n c ey are r na e er nanc a ns ru en s nc u n re u ar ay urc ases an sa es nanc a asse s s a e rec n e n e ra e a e c s e a e n c e Bank ec es a ar y e c n rac ua r s ns e ns ru en
nanc a asse r nanc a a y s a e easure n a y a a r a ue us r an e n a a r a ue r u r r ss ransac n c s s a are rec y a r u a e s ac u s n r ssue
ii) Classification and subsequent measurement
a) Financial Assets n n a rec n n a nanc a asse s a e c ass e e er as easure a e er a r se c s a r a ue r u er c re ens e nc e r a r a ue r u r r ss
e Bank s a easure a nanc a asse a a r se c s ee s e n c n ns an s n es na e a e asse s e n a us ness e se ec e s asse s c ec c n rac ua cas s an e c n rac ua er s e nanc a asse e r se n s ec e a es cas s a are s e y ay en s r nc a an n eres
e ns ru en s a e easure a n y ee s e n c n ns an s n es na e a e asse s e n a us ness e se ec e s ac e e y c ec n c n rac ua cas s an se n nanc a asse s an e c n rac ua er s e nanc a asse e r se n s ec e a es cas s a are
n n a rec n n an e u y n es en a s e r ra n s a e c ass e a e er r e u y n es en a s n e r ra n e Bank ay rre ca y e ec resen su se uen c an es n a r a ue n er c re ens e nc e s e ec n s a e n an n es en y n es en as s
er nanc a asse s a n ee e c ass ca n cr er a a a r e c s r a e s a e c ass e as easure a
n a n n n a rec n n e Bank ay rre ca y es na e a nanc a asse a er se ee s e re u re en s e easure a a r e c s r a as a n s e na es r s n can y re uces an acc un n s a c a u er se ar se
36 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT r e year en e une
Business model assessment e Bank s a ake an assess en e ec e a us ness e n c an asse s e a a r e e ecause s es re ec s e ay e us ness s ana e an n r a n s r e ana e en e n r a n c ns ere nc u es e s a e c es an ec es r e r an e era n se c es n rac ce n ar cu ar e er management’s s ra e y cuses n earn n c n rac ua n eres re enue a n a n n a ar cu ar n eres ra e r e a c n e ura n e nanc a asse s e ura n e a es a are un n se asse s r rea n cas s r u e sa e e asse s - how the performance of the portfolio is evaluated and reported to the Bank’s management; e r sks a a ec e er r ance e us ness e an e nanc a asse s e n a us ness e an s s ra e y r se r sks are ana e ana ers e us ness are c ensa e e e er c ensa n s ase n e a r a ue e asse s ana e r e c n rac ua cas s c ec e an e re uency u e an n sa es n r r er s e reas ns r suc sa es an s e ec a ns a u u ure sa es ac y e er n r a n a u sa es ac y s n c ns ere n s a n u as ar an era assess en of how the Bank’s stated objective for managing the financial assets is achieved and how cash flows are realized.
nanc a asse s a are e r ra n r ana e an se er r ance s e a ua e n a a r a ue as s s a e easure a ecause ey are ne er e c ec c n rac ua cas s n r e c ec c n rac ua cas s an se nanc a asse s
nanc a asse s s a n e rec ass e su se uen e r n a rec n n e ce n e er a er e Bank c an es s us ness e r ana n nanc a asse s
Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI)
r e ur ses s assess en ‘principal’ s a e e ne as e a r a ue e nanc a asse n n a rec n n ‘Interest’ s a e e ne as e c ns era n r e e a ue ney an r e cre r sk ass c a e e r nc a a un u s an n ur n a ar cu ar er e an r er as c en n r sks an c s s e u y r sk an a n s ra e c s s as e as r ar n
n assess n e er e c n rac ua cas s are e Bank c ns ers e c n rac ua er s e ns ru en s nc u es assess n e er e nanc a asse c n a ns a c n rac ua er a c u c an e e n r a un c n rac ua cas s suc a u n ee s c n n n ak n e assess en e Bank c ns ers — contingent events that would change the amount and timing of cash flows; — leverage features; — prepayment and extension terms; — terms that limit the Bank’s claim to cash flows from specified assets (e.g. non-recourse loans); and — features that modify consideration of the time value of money (e.g. periodical reset of interest rates).
b) Financial Liabilities e Bank s a c ass y s nanc a a es er an nanc a uaran ees an an c en s as easure a a r se c s r nanc a uaran ee s an un er ak n c en a re u res e ssuer ake s ec e ay en s re urse e er r a ss ncurs ecause a s ec e ar y a s ee s a n en ue n acc r ance e c n rac ua er s
nanc a uaran ees ssue y e Bank are n a y easure a e r a r a ues an n es na e as a are su se uen y easure a e er e a un e a n un er e uaran ee as e er ne n acc r ance r s ns n n en a es an n n en sse s an e a un n a y rec n e ess ere a r r a e cu u a e a r a n rec n e n acc r ance e re enue rec n n c es
37 Bunna International Bank Share Company Notes to the Financial Statements Bunna International Bank S.C. or the year ended une
iii) Impairment t each reporting date the Bank shall assess whether there is objective evidence that financial assets (except e uity investments) other than those carried at are impaired. he Bank shall recognize loss allowances for expected credit losses ( ) on the following financial instruments that are not measured at — financial assets that are debt instruments; — lease receivables; — financial guarantee contracts issued; and — loan commitments issued.
o impairment loss shall be recognized on e uity investments he Bank shall measure loss allowances at an amount e ual to lifetime except for the following which are measured as -month — debt investment securities that are determined to have low credit risk at the reporting date; and —other financial instruments (other than lease receivables) on which credit risk has not increased significantly since their initial recognition
oss allowances for lease receivables shall always be measured at an amount e ual to lifetime . -month is the portion of that results from default events on a financial instrument that are possible within the months after the reporting date. inancial instruments for which a -month is recognized are referred to as ‘Stage 1 financial instruments’
ife-time is the that results from all possible default events over the expected life of the financial instrument. inancial instruments for which a lifetime is recognized but which are not credit-impaired are referred to as ‘Stage financial instruments’ and credit-impaired are referred to as 'stage 3 financial instruments'.
a) Measurement of ECL is a probability-weighted estimate of credit losses. It shall be measured as follows — for financial assets that are not credit-impaired at the reporting date (stage and ) the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Bank in accordance with the contract and the cash flows that the Bank expects to receive); — for financial assets that are credit-impaired at the reporting date (stage ) the difference between the gross carrying amount and the present value of estimated future cash flows; — for undrawn loan commitments the present value of the difference between the contractual cash flows that are due to the Bank if the commitment is drawn down and the cash flows that the Bank expects to receive; and — for financial guarantee contracts the expected payments to reimburse the holder less any amounts that the Bank expects to recover.
b) Restructured financial assets here the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial difficulties of the borrower then the Bank shall assess whether the financial asset should be derecognized and are measured as follows — If the expected restructuring will not result in de-recognition of the existing asset then the expected cash flows arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset — If the expected restructuring will result in de-recognition of the existing asset then the expected fair value of the new asset is treated as the final cash flow from the existing financial asset at the time of its de-recognition. his amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the expected date of de-recognition to the reporting date using the original effective interest rate of the existing financial asset.
38 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT or the ear ended 3 une 1
c) Credit-impaired financial assets t each reporting date the ank shall assess whether financial assets carried at amorti ed cost debt financial assets carried at FVOCI, and finance lease receivables are credit impaired (referred to as ‘Stage 3 financial assets’).
financial asset shall be considered ‘credit impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred vidence that a financial asset is credit-impaired includes the following observable data — significant financial difficulty of the borrower or issuer; — a breach of contract such as a default or past due event; — the restructuring of a loan or advance by the Bank on terms that the Bank would not consider otherwise; — it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or — the disappearance of an active market for a security because of financial difficulties.
loan that has been renegotiated due to deterioration in the borrower’s condition shall be considered to be credit-impair unless there is evidence that the risk of not receiving contractual cash flows has reduced significantl and there are no other indicators of impairment. n addition loan that is overdue for da s or more shall be considered credit-impaired even when the regulator definition of default is different d) Presentation of allowance for ECL in the statement of financial position oss allowances for shall be presented in the statement of financial position as follows — for financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets; — for loan commitments and financial guarantee contracts: generally, as a provision; —where a financial instrument includes both a drawn and an undrawn component and the ank cannot identif the on the loan commitment component separatel from those on the drawn component the ank presents a combined loss allowance for both components. he combined amount is presented as a deduction from the gross carr ing amount of the drawn component. n e cess of the loss allowance over the gross amount of the drawn component is presented as a provision; and — for debt instruments measured at no loss allowance is recognised in the statement of financial position because the carr ing amount of these assets is their fair value. owever the loss allowance shall be disclosed and is recognised in the fair value reserve.
e) Write-off oans and debt securities shall be written off either partiall or in full when there is no reasonable e pectation of recovering the amount in its entiret or a portion thereof. his is generall the case when the ank determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repa the amounts sub ect to the write-off. his assessment shall be carried out at the individual asset level.
ecoveries of amounts previousl written off shall be included in ‘impairment losses on financial instruments’ in the statement of profit or loss and . inancial assets that are written off could still be sub ect to enforcement activities in order to comply with the Bank’s procedures for recovery of amounts due
f) Non-integral financial guarantee contracts he ank shall assess whether a financial guarantee contract held is an integral element of a financial asset that is accounted for as a component of that instrument or is a contract that is accounted for separatel .
here the ank determines that the guarantee is an integral element of the financial asset then an premium pa able in connection with the initial recognition of the financial asset shall be treated as a transaction cost of ac uiring it. he ank shall consider the effect of the protection when measuring the fair value of the debt instrument and when measuring
here the ank determines that the guarantee is not an integral element of the debt instrument then it shall recognise an asset representing an prepa ment of guarantee premium and a right to compensation for credit losses
1
39 Bunna International Bank Share Company Notes to the Financial Statements Bunna International Bank S.C. For the year ended 3 une
iv) Derecognition a) Financial assets he Bank shall derecognise a financial asset when: — The contractual right to the cash flows from the financial asset expires , or — It transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred; or — Bank neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI shall be recognised in profit or loss.
ny cumulative gain loss recognised in OCI in respect of e uity investment securities designated as at FVOCI shall not be recognised in profit or loss on derecognition of such securities. ny interest in transferred financial assets that ualify for derecognition that is created or retained by the Bank shall be recognised as a separate asset or liability.
b) Financial liabilities he Bank shall derecognise a financial liability when its contractual obligations are discharged or cancelled, or e pire
v) Modifications of financial assets and financial liabilities a) Financial assets If the terms of a financial asset are modified, then the Bank shall evaluate whether the cash flows of the modified asset are substantially different
If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset shall be deemed to have e pired. In this case, the original financial asset shall be derecognised and a new financial asset shall be recognised at fair value plus any eligible transaction costs. ny fees received as part of the modification shall be accounted for as follows: — fees that are considered in determining the fair value of the new asset and fees that represent reimbursement of eligible transaction costs shall be included in the initial measurement of the asset; and — other fees are included in profit or loss as part of the gain or loss on derecognition
If cash flows are modified when the borrower is in financial difficulties, then the ob ective of the modification is usually to ma imise recovery of the original contractual terms rather than to originate a new asset with substantially different terms. If the Bank plans to modify a financial asset in a way that would result in forgiveness of cash flows, then it shall first consider whether a portion of the asset should be written off before the modification takes place
here the modification of a financial asset measured at amorti ed cost or FVOCI does not result in de recognition of the financial asset, then the Bank shall first recalculate the gross carrying amount of the financial asset using the original effective interest rate of the asset and recogni es the resulting ad ustment as a modification gain or loss in profit or loss. ny costs or fees incurred and fees received as part of the modification ad ust the gross carrying amount of the modified financial asset and shall be amorti ed over the remaining term of the modified financial asset
here such a modification is carried out because of financial difficulties of the borrower, then the gain or loss shall be presented together with impairment losses. In other cases, it shall be presented as interest income calculated using the effective interest rate method
40 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT or the ear ended une
b) Financial liabilities The an shall derecognise a financial lia ilit when its terms are modified and the cash flows of the modified lia ilit are su stantiall different n this case a new financial lia ilit ased on the modified terms shall e recognised at fair alue The difference etween the carr ing amount of the financial lia ilit derecognised and consideration paid is recognised in profit or loss onsideration paid shall include non financial assets transferred if an and the assumption of lia ilities including the new modified financial lia ilit
here the modification of a financial lia ilit is not accounted for as derecognition then the amortised cost of the lia ilit shall e recalculated discounting the modified cash flows at the original effecti e interest rate and the resulting gain or loss is recognised in profit or loss n costs and fees incurred are recognised as an ad ustment to the carr ing amount of the lia ilit and amortised o er the remaining term of the modified financial lia ilit re computing the effecti e interest rate on the instrument vi) Offsetting inancial assets and financial lia ilities shall e offset and the net amount presented in the statement of financial position when and onl when the an currentl has a legall enforcea le right to set off the amounts and it intends either to settle them on a net asis or to reali e the asset and settle the lia ilit simultaneousl
ncome and expenses shall e presented on a net asis onl when permitted under or for gains and losses arising from a group of similar transactions such as in the Bank’s trading activity
vii) Designation at fair value through profit or loss a) Financial assets t initial recognition the an ma designate certain financial assets as at T ecause this designation eliminates or significantl reduces an accounting mismatch which would otherwise arise b) Financial liabilities The an shall designate certain financial lia ilities as at T in either of the following circumstances — the liabilities are managed, evaluated and reported internally on a fair value basis; or — the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise.
2.6.2 Policy applicable before 1 July 2018
i) Financial assets
a) Initial recognition and measurement
ll financial assets are recognised initiall at fair alue plus in the case of financial assets not recorded at fair alue through profit or loss transaction costs that are attri uta le to the ac uisition of the financial asset urchases or sales of financial assets that re uire deli er of assets within a time frame esta lished regulation or con ention in the mar et place regular wa trades are recognised on the trade date i e the date that the an commits to purchase or sell the asset
41 Bunna International Bank Share Company Notes to the Financial Statements Bunna International Bank S.C. or the year ended une
b) Subsequent measurement
or purposes of subse uent measurement, the Bank s financial assets are classified into two categories • Loans and receivables • Available-for-sale financial investments
Loans and receivables
oans and receivables are non derivative financial assets with fi ed or determinable payments that are not uoted in an active market. fter initial measurement, such financial assets are subse uently measured at amortised cost using the effective interest rate method, less impairment. mortised cost is calculated by taking into account any discount or premium on ac uisition and fees or costs that are an integral part of the . he amortisation is included in interest and similar income in income statement. he losses arising from impairment are recognised in income statement in loan impairment charge.
he Bank did not directly calculate the effective interest rate as it re uires system modifications to handle the enormous data of individual borrowers. owever, as a temporary work around, the contractual rate was used while the loan related fees were deferred to be amorti ed for the loan life time against loans. ur analysis found out that there is no material diffrences between the contract rate and .
he Bank s loans and receivables comprise of loans and advances to customers, ational Bank of thiopia bills and government bonds.
Available-for-sale (AFS) financial assets
investments include e uity securities. uity investments classified as are those which are neither classified as held–for–trading nor designated at fair value through profit or loss. ebt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for li uidity or in response to changes in the market conditions.
fter initial measurement, financial investments are subse uently measured at fair value with unrealised gains or losses recognised in and credited in the reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the reserve to income statement in impairment loss on financial investment. nterest earned whilst holding financial investments is reported as interest and similar income using the method. n uoted e uity securities whose fair value cannot be reliably measured are carried at cost. ll other available for sale investments are carried at fair value.
42 Bunna International Bank Share Company Notes to the Financial Statements or the ear ended ne AUDITOR’S REPORT
he an eval ates hether the abilit and intention to sell its A financial assets in the near term is still a ro riate hen in rare circ mstances the an is nable to trade these financial assets d e to inactive mar ets the an ma elect to reclassif these financial assets if the management has the abilit and intention to hold the assets for foreseeable f t re or ntil mat rit
or a financial asset reclassified from the A categor the fair val e carr ing amo nt at the date of reclassification becomes its ne amortised cost and an revio s gain or loss on the asset that has been recognised in e it is amortised to rofit or loss over the remaining life of the investment sing the An difference bet een the ne amortised cost and the mat rit amo nt is also amortised over the remaining life of the asset sing the f the asset is s bse entl determined to be im aired then the amo nt recorded in e it is reclassified to rofit or loss efer to the information belo nder reclassification
c) Reclassification of financial assets
eclassification is at the election of management and is determined on an instr ment b instr ment basis he an does not reclassif an financial instr ment into the fair val e thro gh rofit or loss categor after initial recognition
or a financial asset reclassified o t of the ’Available–for–sale’ categor an revio s gain or loss on that asset that has been recognised in e it is amortised to income statement over the remaining life of the investment sing the An difference bet een the ne amortised cost and the e ected cash flo s is also amortised over the remaining life of the asset sing the f the asset is s bse entl determined to be im aired then the amo nt recorded in e it is reclassified to income statement
he an ma reclassif a non–derivative trading asset o t of the ‘held–for–trading’ categor and into the ‘loans and receivables’ categor if it meets the definition of loans and receivables and the an has the intention and abilit to hold the financial asset for the foreseeable f t re or ntil mat rit f a financial asset is reclassified and if the an s bse entl increases its estimates of f t re cash recei ts as a res lt of increased recoverabilit of those cash recei ts the effect of that increase is recognised as an ad stment to the from the date of the change in estimate
d) Derecognition of financial assets
A financial asset or here a licable a art of a financial asset or art of a gro of similar financial assets is rimaril derecognised (i.e. removed from the Bank’s statement of financial position) when:
• the rights to receive cash flows from the asset have expired, or • the an has transferred its rights to receive cash flo s from the asset or has ass med an obligation to a the received cash flows in full without material delay to a third party under a ‘pass–through’ arrangement; and either
a the an has transferred s bstantiall all the ris s and re ards of the asset or b the an has neither transferred nor retained s bstantiall all the ris s and re ards of the asset b t has transferred control of the asset
43 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank S.C. une
hen the Bank has transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. hen it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Bank continues to recognise the transferred asset to the extent of the Bank’s continuing involvement. n that case, the Bank also recognises an associated liability. he transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Bank has retained.
ontinuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Bank could be re uired to repay.
e) Impairment of financial assets
he Bank assesses at each reporting date, whether there is any ob ective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. vidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, the probability that they will enter Bankruptcy or other financial reorganisation, default or delin uency in interest or principal payments and where observable data indicates that there is measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
or financial assets carried at amortised cost (such as loans and receivables), the Bank first assesses individually whether ob ective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. f the Bank determines that no ob ective evidence of impairment exists for an individually assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
f there is ob ective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). he carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in income statement. nterest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
he interest income is recorded as part of ‘Interest and similar income’. oans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Bank. f, in a subse uent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by ad usting the allowance account. f a future write–off is later recovered, the recovery is credited to the ’loan impairment charge’.
he present value of the estimated future cash flows is discounted at the financial asset’s original . f a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current .
he calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
44 Bunna International Bank Share Company Notes to the Financial Statements or the ear en e ne AUDITOR’S REPORT
or the p rpose of a collective eval ation of impairment, financial assets are gro pe on the asis of the Bank’s internal cre it gra ing s stem, that consi ers cre it risk characteristics s ch as asset t pe, in str , geographical location, collateral type, past–due status and other relevant factors.
istorical loss e perience is a ste on the asis of c rrent o serva le ata to reflect the effects of c rrent con itions on which the historical loss e perience is ase an to remove the effects of con itions in the historical perio that o not e ist c rrentl . stimates of changes in f t re cash flows reflect, an are irectionall consistent with, changes in relate o serva le ata from ear to ear s ch as changes in nemplo ment rates, propert prices, commo it prices, pa ment stat s, or other factors that are in icative of inc rre losses in the Bank an their magnit e). he metho olog an ass mptions se for estimating f t re cash flows are reviewe reg larl to re ce an ifferences etween loss estimates an act al loss e perience.
Available-for-sale (AFS) financial instruments
vaila le for sale financial assets are impaire if there is o ective evi ence of impairment, res lting from one or more loss events that occ rre after initial recognition t efore the reporting ate, that have an impact on the f t re cash flows of the asset. In a ition, an availa le for sale e it instr ment is generall consi ere impaire if a significant or prolonge ecline in the fair val e of the instr ment elow its cost has occ rre . here an availa le for sale asset, which has een remeas re to fair val e irectl thro gh e it , is impaire , the impairment loss is recognise in profit or loss. If an loss on the financial asset was previo sl recognise irectl in e it as a re ction in fair val e, the c m lative net loss that ha een recognise in e it is transferre to profit or loss an is recognise as part of the impairment loss. he amo nt of the loss recognise in profit or loss is the ifference etween the ac isition cost an the c rrent fair val e, less an previo sl recognise impairment loss.
If, in a s se ent perio , the amo nt relating to an impairment loss ecreases an the ecrease can e linke o ectivel to an event occ rring after the impairment loss was recognise , where the instr ment is a e t instr ment, the impairment loss is reverse thro gh profit or loss. n impairment loss in respect of an e it instr ment classifie as availa le for sale is not reverse thro gh profit or loss t acco nte for irectl in e it .
f) Renegotiated loans
here possi le, the Bank seeks to restr ct re loans rather than to take possession of collateral. his ma involve e ten ing the pa ment arrangements an the agreement of new loan con itions. nce the terms have een renegotiate an impairment is meas re sing the original I as calc late efore the mo ification of terms an the loan is no longer consi ere past e. anagement contin all reviews renegotiate loans to ens re that all criteria are met an that f t re pa ments are likel to occ r. he loans contin e to e s ect to an in ivi al or collective impairment assessment, calculated using the loan’s original EIR.
Collateral valuation
he Bank seeks to se collateral, where possi le, to mitigate its risks on financial assets. he collateral comes in vario s forms s ch as il ings, machineries an motor vehicle. he fair val e of collateral is generall assesse , at a minim m, at inception an ase on the Bank s reporting sche le.
o the e tent possi le, the Bank ses active market ata for val ing financial assets, hel as collateral. ther financial assets which o not have a rea il etermina le market val e are val e sing mo els.
45 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank S.C. une
Collateral repossessed
Repossessed collateral represents financial and non financial assets ac uired y the Bank in settlement of overdue loans. he Bank’s policy is to determine hether a repossessed asset is est used for its internal operations or should e sold. ssets determined to e used for internal operations are initially recognised at the lo er of their repossessed value or the carrying value of the original secured asset and included in the relevant assets depending on the nature and the Bank’s intention in respect of recovery of these assets, and are su se uently remeasured and accounted for in accordance ith the accounting policies for these categories of assets. ssets that are determined etter to e sold are immediately transferred to assets held for sale at their fair value at the repossession date in line with the Bank’s policy.
ii) Financial liabilities
a) Initial recognition and measurement
inancial lia ilities are classified at initial recognition, as financial lia ilities at fair value through profit or loss and other financial lia ilities.
ll financial lia ilities are recognised initially at fair value and, in the case of other financial lia ilities, net of directly attri uta le transaction costs.
he Bank s financial lia ilities include customer deposits, due to financial institutions, margin held on letters of credit, orro ings and other lia ilities. Interest e penditure is recognised in interest and similar e pense.
b) Subsequent measurement
he measurement of financial lia ilities depends on their classification, as descri ed elo
Financial liabilities at amortised cost
inancial instruments issued y the Bank, that are not designated at fair value through profit or loss ut are classified as financial lia ilities at amortised cost, here the su stance of the contractual arrangement results in the Bank having an o ligation either to deliver cash or another financial asset to the holder, or to satisfy the o ligation other than y the e change of a fi ed amount of cash or another financial asset for a fi ed num er of o n e uity shares.
fter initial measurement, financial lia ilities at amortised cost are su se uently measured at amortised cost using the effective interest rate EIR . mortised cost is calculated y taking into account any discount or premium on the issue and costs that are an integral part of the EIR.
c) Derecognition of financial liabilities
s financial assets are derecognised hen the contractual rights to receive the cash flo s from these assets have ceased to e ist or the assets have een transferred and su stantially all the risks and re ards of o nership of the assets are also transferred that is, if su stantially all the risks and re ards have not een transferred, the Bank tests control to ensure that continuing involvement on the asis of any retained po ers of control does not prevent derecognition .
inancial lia ilities are derecognised hen they have een redeemed or other ise e tinguished.
46 Bunna International Bank Share Company Notes to the Financial Statements or the year ended une AUDITOR’S REPORT
iii) Offsetting financial instruments
inancial assets and lia ilities are offset and the net a ount reported in the state ent of financial position where he Bank has a le ally enforcea le ri ht to offset the reco nised a ounts and there is an intention to settle on a net asis or realise the asset and settle the lia ility si ultaneously he le al enforcea le ri ht ust not e contin ent on future events and ust e enforcea le in the nor al course of usiness and in the event of default insolvency or ankruptcy of the Bank or the counterparty
2.7 Cash and cash equivalents
ash and cash equivalents’ include notes and coins on hand unrestricted alances held withcentral anks and hi hly li uid financial assets with ori inal aturities of three onths or less fro the date of ac uisition that are su ect to an insi nificant risk of chan es in their fair value and areused y the Bank in the ana e ent of its short ter co it ents ash and cash e uivalents are carried at a ortised cost in the state ent of financial position
or the purposes of the cash flow state ent cash and cash e uivalents include cash and restricted alances with ational Bank of thiopia
2.8 Property, plant and equipment
roperty plant and e uip ent is stated at cost net of accu ulated depreciation and accu ulated i pair ent losses if any uch cost includes the cost of replacin part of the property plant and e uip ent if the reco nition criteria are et hen si nificant parts of property plant and e uip ent are re uired to e replaced at intervals the Bank reco nises such parts as individual assets with specific useful lives and depreciates the accordin ly ll other repair and aintenance costs are reco nised in inco e state ent as incurred
u se uent costs are included in the asset’s carryin a ount or reco nised as a separate asset as appropriate only when it is pro a le that future econo ic enefits associated with the ite will flow to the roup and the cost of the ite can e easured relia ly he carryin a ount of the replaced part is dereco nised
epreciation is calculated usin the strai ht line ethod to allocate their cost to their residual values over their esti ated useful lives as follows
Asset class Depreciation Residual Value rate (years) (%)
re ises otor vehicles o puter e uip ent ffice and other e uip ent urniture and fittin s
he Bank co ences depreciation when the asset is availa le for use
n ite of property plant and e uip ent and any si nificant part initially reco nised is dereco nised upon disposal or when no future econo ic enefits are e pected fro its use disposal ny ain or loss arisin on dereco nition of the asset calculated as the difference etween the net disposal proceeds and the carryin a ount of the asset is included in inco e state ent when the asset is dereco nised
he residual values useful lives and ethods of depreciation of property plant and e uip ent are reviewed at each financial year end and ad usted prospectively if appropriate han es in the e pected useful life residual values or ethod of depercation are accounted for as chan e in accountin esti ate
47 Bunna International Bank Share Company Notes to the Financial Statements Bunna t e International ea en e Bank S.C. une
2.9 Intangible assets
ntan i le assets a qui e se a atel a e easu e n initial e niti n at st ll in initial e niti n intan i le assets a e a ie at st less an a u ulate a tisati n an a u ulate i ai ent l sses i an nte nall ene ate intan i les e lu in a italise evel ent sts a e n t a italise an t e elate e en itu e is e le te in in e state ent in t e e i in i t e e en itu e is in u e
e use ul lives intan i le assets a e assesse t e eit e inite in e inite ntan i le assets it inite lives a e a tise ve t e use ul e n i li e e a tisati n e i an t e a tisati n et an intan i le asset it a inite use ul li e a e evie e at least at ea inan ial ea en an es in t e e e te use ul li e t e e e te atte n nsu ti n utu e e n i ene its e ie in t e asset a e a unte an in t e a tisati n e i et l as a iate i a e t en t eate as an es in a untin esti ates e a tisati n e enses n intan i le assets it inite lives is esente as a se a ate line ite in t e in e state ent
tisati n is al ulate usin t e straight–line et t ite n t e st intan i le assets t t ei esi ual values ve t ei esti ate use ul lives as ll s
• Core application software – 6 years
2.10 Impairment of non-financial assets
e an assesses at ea e tin ate et e t e e is an in i ati n t at an asset a e i ai e an in i ati n e ists en annual i ai ent testin an asset is equi e t e an esti ates t e asset’s e ve a le a unt n asset’s e ve a le a unt is t e i e an asset’s as ene atin unit’s ai value less sts is sal an its value in use e ve a le a unt is ete ine an in ivi ual asset unless t e asset es n t ene ate as in l s t at a e la el in e en ent t se t e assets u s assets en t e a in a unt an asset e ee s its e ve a le a unt t e asset is nsi e e i ai e an is itten n t its e ve a le a unt
n assessin value in use t e esti ate utu e as l s a e is unte t t ei esent value usin a e ta is unt ate t at e le ts u ent a et assess ents t e ti e value ne an t e is s s e i i t t e asset n ete inin ai value less sts is sal e ent a et t ansa ti ns a e ta en int a unt n su t ansa ti ns an e i enti ie an a iate valuati n el is use ese al ulati ns a e ate valuati n ulti les qu te s a e i es u li l t a e anies t e availa le ai value in i at s
e an ases its i ai ent al ulati n n etaile u ets an e ast al ulati ns i a e e a e se a atel ea t e Bank’s s t i t e in ivi ual assets a e all ate ese u ets an e ast al ulati ns ene all ve a e i ive ea s l n e e i s a l n te t ate is al ulate an a lie t e t utu e as l s a te t e i t ea
assets e lu in ill an assess ent is a e at ea e tin ate t ete ine et e t e e is an in i ati n t at evi usl e nise i ai ent l sses n l n e e ist ave e ease su in i ati n e ists t e an esti ates t e asset’s CGU’s e ve a le a unt evi usl e nise i ai ent l ss is eve se nl i t e e as een a an e in t e assu ti ns use t ete ine t e asset’s e ve a le a unt sin e t e last i ai ent l ss as e nise e eve sal is li ite s t at t e a in a unt t e asset es n t e ee its e ve a le a unt n e ee t e a in a unt t at ul ave een ete ine net e e iati n a n i ai ent l ss een e nise t e asset in i ea s u eve sal is e nise in t e in e state ent
48 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT or the year en e une
2.11 Other assets
ther assets are generally efine as clai s hel against other entities for the future receipt of oney he other assets in the Bank s financial state ents inclu e the following
i) Prepayment
repay ents are pay ents a e in a ance for ser ices to e en oye in future he a ount is initially capitalise in the reporting perio in which the pay ent is a e an su se uently a ortise o er the perio in which the ser ice is to e en oye
ii) Other receivables
ther recei a les are recognise upon the occurrence of e ent or transaction as they arise an cancelle when pay ent is recei e he Bank s other recei a les are a ance pay ents for purchase of goo s an ser ices an other recei a les fro e tors
2.12 Fair value measurement
he Bank easures financial instru ents classifie as financial asset at fiar alue through other co prhensi e inco e at fair alue at each state ent of financial position ate air alue relate isclosures for financial instru ents an non financial assets that are easure at fair alue or where fair alues are isclose are su arise in the following notes
• Disclosures for valuation methods, significant estimates and assumptions Notes 3 and Note 4.7.3 • Quantitative disclosures of fair value measurement hierarchy ote • Financial instruments (including those carried at amortised cost) Note 4.2
air alue is the price that woul e recei e to sell an asset or pai to transfer a lia ility in an or erly transaction etween arket participants at the easure ent ate he fair alue easure ent is ase on the presu ption that the transaction to sell the asset or transfer the lia ility takes place either
• In the principal market for the asset or liability, or • In the absence of a principal market, in the most advantageous market for the asset or liability.
he principal or the ost a antageous arket ust e accessi le to y the Bank
he fair alue of an asset or a lia ility is easure using the assu ptions that arket participants woul use when pricing the asset or lia ility assu ing that arket participants act in their econo ic est interest
he Bank uses aluation techni ues that are appropriate in the circu stances an for which sufficient ata are a aila le to easure fair alue a i ising the use of rele ant o ser a le inputs an ini ising the use of uno ser a le inputs
ll assets an lia ilities for which fair alue is easure or isclose in the financial state ents are categorise within the fair alue hierarchy escri e as follows ase on the lowest le el input that is significant to the fair alue easure ent as a whole • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. • e el — aluation techni ues for which the lowest le el input that is significant to the fair alue easure ent is irectly or in irectly o ser a le • e el — aluation techni ues for which the lowest le el input that is significant to the fair alue easure ent is uno ser a le
or assets an lia ilities that are recognise in the financial state ents on a recurring asis the Bank eter ines whether transfers ha e occurre etween e els in the hierarchy y re assessing categorisation ase on the lowest le el input that is significant to the fair alue easure ent as a whole at the en of each reporting perio
he Bank’s anage ent eter ines the policies an proce ures for oth recurring fair alue easure ent such as financial asset easure at fair alue thorough other co prhensi e inco e
or the purpose of fair alue isclosures the Bank has eter ine classes of assets an lia ilities on the asis of the nature characteristics an risks of the asset or lia ility an the le el of the fair alue hierarchy as e plaine a o e
49 Bunna International Bank Share Company Notes to the Financial Statements ForBunna the International year ended Bank S.C. 3 une 2 1
2.13 Employee benefits
he Bank operates various post employment schemes, including both defined benefit and defined contribution pension plans and post employment benefits.
i) Defined contribution plan
he Bank operates t o defined contribution plans
i) pension scheme in line ith the provisions of thiopian pension of private organisation employees proclamation 71 2 11. Funding under the scheme is 7 and 11 by employees and the Bank respectively ii) provident fund contribution, funding under this scheme is 7 and 13 by employees and the Bank respectively. Based on the employees salary, employer s contributions to this scheme are charged to profit or loss and other comprehensive income in the period in hich they relate.
ii) Defined benefit plan
he liability or asset recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. he defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
he liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. he defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. he present value of the defined benefit obligation is determined by discounting the estimated future cash outflo s using interest rates of high uality corporate bonds that are denominated in the currency in hich the benefits ill be paid, and that have terms to maturity appro imating to the terms of the related pension obligation.
he current service cost of the defined benefit plan, recognised in the income statement in employee benefit e pense, e cept here included in the cost of an asset, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes curtailments and settlements.
ast service costs are recognised immediately in income.
ctuarial gains and losses arising from e perience adjustments and changes in actuarial assumptions are charged or credited to e uity in other comprehensive income in the period in hich they arise.
iii) Profit-sharing and bonus plans
he Banks recognises a liability and an e pense for bonuses and profit sharing based on a formula that takes into consideration the profit attributable to the Bank’s shareholders after certain adjustments. he Bank recognises a provision here contractually obliged or here there is a past practice that has created a constructive obligation.
3
50 Bunna International Bank Share Company Notes to the Financial Statements a n n AUDITOR’S REPORT
2.14 Provisions
s ns a n s n Bank as a s n a n a ns as a s a as n s a a an s s n n n s s a n an a a s a an a a n a n n Bank s s a a s n s a n an ns an n a s n s n s as a s a a ass n n s n s a a n ns a n a s n s s n n n s a n n an s n
a n s a a s ns a s n s n a n a a a s n a a sks s a n s n n s s n as n s n assa s n s as a n ns s
2.15 Share capital
n n a s s a a ss n s a s a ass as s a a a n ss an a a a s a s ss s as s a n
2.16 Earnings per share
Bank s n s as a n n s a s na s a s Bas a n n s s a a a a n ss a a na s a s Bank a a n s a s s an n n s n a s n ss a a na s a s an a a n na s a s s an n s a n a na s a s
2.17 Leases
na n an a an n s a as n a ns a as s as n s s an a an n an s an ass ss n n a an n s n n n s a s ass ass s a an n n s a s ass
Bank as a lessee
as s a n ans Bank s s an a a sks an n s n n a n s as s a a n as s a n as a n s a n s as an ns n n s a n n a s a n as s as n n n n a a a s n s as an ns n n a n
2.18 Dividend
n s a n n n a a n n s a a n n an nan a s a n s a a s ss a s s n s s n n s n s a a n n s Bank a as s s n an a a ns an s a n n s as s s n as n a n
n s n Bank’s s a s s n s as a a n Bank’s nan a s a n s n period in which the dividends are approved by the Bank’s shareholders.
51 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank S.C. ne
2.19 Income taxation
i) Current income tax
he inco e ta e pense or credit or the period is the ta payable on the c rrent period’s ta able inco e based on the applicable inco e ta rate or each risdiction ad sted by chan es in de erred ta assets and liabilities attrib table to te porary di erences and to n sed ta losses.
he c rrent inco e ta char e is calc lated on the basis o the ta laws enacted or s bstantively enacted at the end o the reportin period in thiopia. ana e ent periodically eval ates positions taken in ta ret rns with respect to sit ations in which applicable ta re lation is s b ect to interpretation. t establishes provisions where appropriate on the basis o a o nts e pected to be paid to the ta a thorities.
ii) Deferred tax
e erred ta is reco nised on te porary di erences arisin between the ta bases o assets and liabilities and their carryin a o nts in the inancial state ents. owever de erred ta liabilities are not reco nised i they arise ro the initial reco nition o oodwill de erred ta is not acco nted or i it arises ro initial reco nition o an asset or liability in a transaction other than a b siness co bination that at the ti e o the transaction a ects neither acco ntin nor ta able pro it or loss.
e erred ta is deter ined sin ta rates and laws that have been enacted or s bstantively enacted by the balance sheet date and are e pected to apply when the related de erred ta asset is realised or the de erred ta liability is settled.
e erred ta assets are reco nised only to the e tent that it is probable that t re ta able pro it will be available a ainst which the te porary di erences can be tilised.
e erred ta assets and liabilities are o set when there is a le ally en orceable ri ht to o set c rrent ta assets a ainst c rrent ta liabilities and when the de erred ta es assets and liabilities relate to inco e ta es levied by the sa e ta ation a thority on either the sa e ta able entity or di erent ta able entities where there is an intention to settle the balances on a net basis.
e erred ta assets and liabilities are only o set when they arise in the sa e ta reportin ro p and where there is both the le al ri ht and the intention to settle on a net basis or to realise the asset and settle the liability si ltaneo sly.
3 Significant accounting judgements, estimates and assumptions
he preparation o the Bank’s inancial state ents re ires ana e ent to ake d e ents esti ates and ass ptions that a ect the reported a o nt o reven es e penses assets and liabilities and the acco panyin disclos res as well as the disclos re o contin ent liabilities. ncertainty abo t these ass ptions and esti ates co ld res lt in o tco es that re ire a aterial ad st ent to the carryin a o nt o assets or liabilities a ected in t re periods.
Other disclosures relating to the Bank’s exposure to risks and uncertainties includes: • Capital management Note 4.6 • Financial risk management and policies Note 4.1 • Sensitivity analyses disclosures Note 4.5.2
he key ass ptions concernin the t re and other key so rces o esti ation at the reportin date that have a si ni icant risk o ca sin a aterial ad st ent to the carryin a o nts o assets and liabilities within the ne t inancial year are described below. he Bank based its ass ptions and esti ates on para eters available when the inancial state ents were prepared. istin circ stances and ass ptions abo t t re develop ents however ay chan e d e to arket chan es or circ stances beyond the control o the Bank. ch chan es are re lected in the ass ptions when they occ r.
52 Bunna International Bank Share Company Notes to the Financial Statements For the year ended une 2 1 AUDITOR’S REPORT
i) Impairment losses on loans and receivables
he Bank revie s its loan port olios or impairment on an on going asis. he Bank irst assesses hether o ective evidence o impairment exists . mpairment provisions are also recognised or losses not speci ically identi ied ut hich experience and o serva le data indicate are present in the port olio at the date o assessment.
anagement uses estimates ased on historical loss experience or assets ith credit risk characteristics and o ective evidence o impairment similar to those in the port olio hen scheduling its uture cash lo s. he methodology and assumptions used or estimating oth the amount and timing o uture cash lo s are revie ed regularly to reduce any di erences et een loss estimates and actual loss experience.
he use o historical loss experience is supplemented ith signi icant management udgment to assess hether current economic and credit conditions are such that the actual level o inherent losses is likely to di er rom that suggested y historical experience. n normal circumstances historical experience provides o ective and relevant in ormation rom hich to assess inherent loss ithin each port olio. n other circumstances historical loss experience provides less relevant in ormation a out the inherent loss in a given port olio at the alance sheet date or example here there have een changes in economic conditions such that the most recent trends in risk actors are not ully re lected in the historical in ormation. n these circumstances such risk actors are taken into account hen calculating the appropriate levels o impairment allo ances y ad usting the impairment loss derived solely rom historical loss experience.
he detailed methodologies areas o estimation and udgement applied in the calculation o the Bank s impairment charge on inancial assets are set out in the Financial risk management section.
he estimation o impairment losses is su ect to uncertainty hich has increased in the current economic environment and is highly sensitive to actors such as the level o economic activity unemployment rates property price trends and interest rates. he assumptions underlying this udgement are highly su ective. he methodology and the assumptions used in calculating impairment losses are revie ed regularly in the light o di erences et een loss estimates and actual loss experience.
ii) Fair value measurement of financial instruments
hen the air values o inancial assets and inancial lia ilities recorded in the statement o inancial position cannot e measured ased on uoted prices in active markets their air value is measured using valuation techni ues including the discounted cash lo CF model. he inputs to these models are taken rom o serva le markets here possi le ut here this is not easi le a degree o udgement is re uired in esta lishing air values. udgements include considerations o inputs such as li uidity risk credit risk and volatility. here are no inancial instruments currently measured at air value except investment on e uity. See note 4. .2 or urther discussion on air value disclosures o inancial instruments.
iii) Defined benefit plans
he cost o the de ined ene it pension plan long service a ards gratuity scheme and post employment medical ene its and the present value o these de ined ene it o ligations are determined using actuarial valuations. n actuarial valuation involves making various assumptions that may di er rom actual developments in the uture. hese include the determination o the discount rate uture salary increases mortality rates and uture pension increases. ue to the complexities involved in the valuation and its long term nature a de ined ene it o ligation is highly sensitive to changes in these assumptions. ll assumptions are revie ed at each reporting date.
53 Bunna International Bank Share Company Notes to the Financial Statements ForBunna the International year ended Bank S.C. une 2 1
iv) Impairment of non-financial assets
mpairment exists hen the carrying value o an asset or cash generating unit exceeds its recovera le amount hich is the higher o its air value less costs o disposal and its value in use. he air value less costs o disposal calculation is ased on availa le data rom inding sales transactions conducted at arm’s length or similar assets or o serva le market prices less incremental costs or disposing o the asset. he value in use calculation is ased on a CF model. he cash lo s are derived rom the udget or the next ive years and do not include restructuring activities that the Bank is not yet committed to or signi icant uture investments that ill enhance the asset’s per ormance o the C eing tested. he recovera le amount is sensitive to the discount rate used or the discounted cash lo model as ell as the expected uture cash in lo s and the gro th rate used or extrapolation purposes.
v) Income taxes
ncertainties exist ith respect to the interpretation o complex tax regulations changes in tax la s and the amount and timing o uture taxa le income. iven the ide range o international usiness relationships and the long term nature and complexity o existing contractual agreements di erences arising et een the actual results and the assumptions made or uture changes to such assumptions could necessitate uture ad ustments to tax income and expense already recorded. he amount o such provisions is ased on various actors such as experience o previous tax audits and di ering interpretations o tax regulations y the taxa le entity and the responsi le tax authority.
e erred tax assets are recognised or unused tax losses to the extent that it is pro a le that taxa le pro it ill e availa le against hich the losses can e utilised. Signi icant management udgement is re uired to determine the amount o de erred tax assets that can e recognised ased upon the likely timing and the level o uture taxa le pro its together ith uture tax planning strategies.
4
54 Bunna International Bank Share Company Notes to the Financial Statements ForBunna the year International ended 30 June Bank 2019 Share Company AUDITOR’S REPORT Notes to the Financial Statements For the year ended 30 June 2019 4 Financial risk management
4.1 Introduction 4 Financial risk management Risk is inherent in the Bank’s activities, but is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Bank’s continuing profitability and each 4.1 Introduction individual within the Bank is accountable for the risk exposures relating to his or her responsibilities. The Bank is exposed to credit risk, liquidity risk and market risk. It is also subject to country risk and various operating risks. Risk is inherent in the Bank’s activities, but is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Bank’s continuing profitability and each The independent risk control process does not include business risks such as changes in the environment, technology and industry. individual within the Bank is accountable for the risk exposures relating to his or her responsibilities. The Bank is exposed to credit The Bank's policy is to monitor those business risks through the Bank’s strategic planning process. risk, liquidity risk and market risk. It is also subject to country risk and various operating risks.
The independent risk control process does not include business risks such as changes in the environment, technology and industry. 4.1.1 Risk management structure The Bank's policy is to monitor those business risks through the Bank’s strategic planning process.
Bunna Bank assesses and evaluates broad spectrum of risks that the bank face including Strategic Risk, Credit Risk, Market Risk, Operational risk, Liquidity risk, Reputational risk, Systemic risk, and Moral hazard. 4.1.1 Risk management structure There has been effective risk management framework that implemented on an enterprise-wide basis based on the three (3) lines of Bunna Bank assesses and evaluates broad spectrum of risks that the bank face including Strategic Risk, Credit Risk, Market Risk, defense concept, whereby risks are managed collectively by all functions, namely the business/support functions, risk and Operational risk, Liquidity risk, Reputational risk, Systemic risk, and Moral hazard. compliance management and internal control directorates. Moreover, there shall be other organizations such as National Bank of Ethiopia (NBE) and external auditor which ensure the soundness and safety of the Bank. NBE has been conducted the periodic There has been effective risk management framework that implemented on an enterprise-wide basis based on the three (3) lines of reviews of bank’s risk profile through quarterly off- and on-site surveillance and full on-site examination once in two years. On the defense concept, whereby risks are managed collectively by all functions, namely the business/support functions, risk and other hand, external auditor has been conducted its reviews on elements of bank’s financial statement such as assets, liabilities, compliance management and internal control directorates. Moreover, there shall be other organizations such as National Bank of equities, income and expenses in an annual basis. Ethiopia (NBE) and external auditor which ensure the soundness and safety of the Bank. NBE has been conducted the periodic reviews of bank’s risk profile through quarterly off- and on-site surveillance and full on-site examination once in two years. On the other hand, external auditor has been conducted its reviews on elements of bank’s financial statement such as assets, liabilities, 4.1.2 equities,Risk measurement income and expenses and reporting in an annual systems basis.
The Bank’s risks are measured using a method that reflects both the expected loss likely to arise in normal circumstances and unexpected losses, which are an estimate of the ultimate actual loss based on statistical models. The models make use of 4.1.2 Risk measurement and reporting systems probabilities derived from historical experience, adjusted to reflect the economic environment. The Bank also runs worst-case scenarios that would arise in the event that extreme events which are unlikely to occur do, in fact, occur. The Bank’s risks are measured using a method that reflects both the expected loss likely to arise in normal circumstances and unexpected losses, which are an estimate of the ultimate actual loss based on statistical models. The models make use of Monitoring and controlling risks is primarily performed based on limits established by the Bank. These limits reflect the business probabilities derived from historical experience, adjusted to reflect the economic environment. The Bank also runs worst-case strategy and market environment of the Bank as well as the level of risk that the Bank is willing to accept, with additional emphasis scenarios that would arise in the event that extreme events which are unlikely to occur do, in fact, occur. on selected regions. In addition, the Bank’s policy is to measure and monitor the overall risk bearing capacity in relation to the aggregate risk exposure across all risk types and activities. Monitoring and controlling risks is primarily performed based on limits established by the Bank. These limits reflect the business strategy and market environment of the Bank as well as the level of risk that the Bank is willing to accept, with additional emphasis on selected regions. In addition, the Bank’s policy is to measure and monitor the overall risk bearing capacity in relation to the 4.1.3 Risk mitigation aggregate risk exposure across all risk types and activities.
Risk controls and mitigants, identified and approved for the Bank, are documented for existing and new processes and systems. 4.1.3 TheRiskadequacy mitigationof these mitigants is tested on a periodic basis through administration of control self-assessment questionnaires, using an operational risk management tool which requires risk owners to confirm the effectiveness of established controls. These are subsequently audited as part of the review process. Risk controls and mitigants, identified and approved for the Bank, are documented for existing and new processes and systems. The adequacy of these mitigants is tested on a periodic basis through administration of control self-assessment questionnaires, using an operational risk management tool which requires risk owners to confirm the effectiveness of established controls. These are subsequently audited as part of the review process.
35
35
55 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year en e Bank S.C. une
4.2 Financial instruments by category
The Bank's inancial assets are classi ie into the ollo ing measurement categories amorti e cost an loans an rece iables an a ailable or sale respecti ely be ore uly an the inancial liabilities are classi ie into other liabilities at amortise cost.
inancial instruments are classi ie in the statement o inancial position in accor ance ith their legal orm an substance.
The Bank's classi ication o its inancial assets is summarise in the table belo Amortized FVOCI Notes Cost Total 30 June 2019 Birr'000 Birr'000 Birr'000
ash an bank balances oans an a ances to customers net inancial assets at air alue through inancial assets at amorti e cost ther inancial assets
Total financial assets 63,813 13,761,279 13,825,093
Available-For- Loans and Notes Sale receivables Total 30 June 2018 Birr'000 Birr'000 Birr'000
ash an bank balances oans an a ances to customers net n estment security a ailable or sale n estment security loans an recei ables ther inancial assets
Total financial assets 42,002 12,470,472 12,512,474
56 Bunna International Bank Share Company Notes to the Financial Statements or the year en e une AUDITOR’S REPORT
4.3 Credit risk re it risk is the risk o inancial loss to the Bank i a customer or counterparty to a inancial instrument ails to meet its contractual obligations an arises principally rom the Bank’s loans an a ances to customers an other banks an other inancial assets
posure to cre it risk is manage through perio ic analysis o the ability o borro ers an potential borro ers to etermine their capacity to meet principal an interest thereon an restructuring such limits as appropriate. posure to cre it risk is also mitigate in part by obtaining collaterals
The Bank structures the le els o cre it risk it un ertakes by placing limits on the amount o risk accepte in relation to one borro er or groups o borro ers an to term o the inancial instrument an economic sectors. The ational Bank o thiopia B sets cre it risk limit or a single borro er one relate party an all relate parties to not exceed 25%, 15% and 35% of the Bank’s total capital amount as of the reporting quarterly period respectively
re it management is con ucte as per the risk management policy an gui eline appro e by the boar o irectors an the isk anagement ommittees. uch policies are re ie e an mo i ie perio ically base on changes an e pectations o the markets here the Bank operates regulations an other actors. 4.3.1 Credit related commitments risks
The Bank hol s collateral against loans an recei ables to customers in the orm o bank guarantees an property. stimates o air alue are base on the alue o collateral assesse at the time o borro ing an generally are not up ate e cept hen a loan is in i i ually assesse as impaire .
4.3.2 Credit risk exposure
a a imum e posure to cre it risk be ore collateral hel or cre it enhancements
The Bank's ma imum e posure to cre it risk at une an une respecti ely is represente by the net carrying amounts in the statement o inancial position.
une une Birr' Birr'
ash an bank balances oans an a ances to customers inancial assets at air alue through inancial assets at amorti e cost ther inancial assets 13,825,093 12,512,474
Credit risk exposures relating to off balance sheets are as follows: uarantees issue an outstan ing ommitments on etter o re it net o argin pai nutilise o er ra t nutili e re ol ing acilities 4,131,693 5,278,714
Total maximum exposure 17,956,786 17,791,188
57 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank 3 S.C. une 2 1
ssets o tained y taking possession of collateral
etails of assets o tained y the Bank y taking possession of collaterals held as security against loan and advances to customers at the end of the year are elo
30 June 30 June 2019 2018 Birr'000 Birr'000 esidential Building 5 3 1 , 33 otor ehicle 2, 55 veco racker otor , 5 ehicle 1,303 18,238
he Bank s policy is to pursue timely realisation of the collateral in a timely manner he Bank does not generally use the cash collateral for its o n operations his repossesed collaterals are held for sale
c oans and advances to customers at amortised cost
i ross loans and advances to customers per sector is analysed as follo s
30 June 30 June 2019 2018 Birr'000 Birr'000
griculture 5, 53 ,3 ransportation , 1 5, 3 anufacturing ndustry 5 , 55 25, 11 omestic rade and ervices 1,1 ,1 2 1, , mport and xport 3,11 , 3 2,1 , Building and construction 1, , 3 1,5 , 2 ersonal non staff 1 ,33 51,33 taff oan 3 3, 3 3, 31 eal estate 2 ,3 1 3, 51 ealth, otel ourism 32 , ,22
8,281,214 6,942,320
ii ross loans and advances to customers per ational Bank of thiopia s impairment guidelines is analysed as follo s
30 June 30 June 2019 2018 Birr'000 Birr'000
ass , ,3 ,1 2, 2 pecial mention 1,1 2, 2,5 u standard 1 ,52 1 5, ou tful 3,213 , oss , 5 3,1 3
8,281,214 6,942,320
he a ove ta le represents a orse case scenario of credit risk exposure of the Bank as at the reporting dates ithout taking account of any collateral held or other credit enhancements attached he exposures are ased on gross carrying amounts as reported in the statement of financial position
3
58 Bunna International Bank Share Company Notes to the Financial Statements or the year ended 3 une 2 1 AUDITOR’S REPORT
4.3.3 Credit quality analysis (a) Credit quality of cash and cash equivalents he credit quality of cash and cash equivalents and short term investments that ere neither past due nor impaired at as 3 une 2 1 and 3 une 2 1 are held in thiopian anks have een classified as non rated as there are no credit rating agencies in thiopia o ever, cash and cash equivalents that held in foreign anks can e assessed y reference to credit rating agency designation as sho n in the ta le elo
30 June 30 June 2019 2018 Birr'000 Birr'000 BBB 1 , B 2,25 3 , 22 ot rated 2,1 2,523 2, 15, 2
2,284,780 2,669,835 Definitions of ratings igh credit quality his denote expectations of lo default risk he capacity for payment of financial commitments is considered strong his capacity may, nevertheless, e more vulnera le to adverse usiness or economic conditions than is the case for higher ratings
BBB ood credit quality his indicates that expectations of default risk are currently lo he capacity for payment of financial commitments is considered adequate, ut adverse usiness or economic conditions are more likely to impair this capacity
B ood credit quality B ratings indicate that material default risk is present ut a limited margin of safety remains inancial commitments are currently eing met ho ever, capacity for continued payment is vulnera le to deterioration in the usiness and economic environment
ot rated his indicates financial institutions or other counterparties ith no availa le ratings and cash in hand
plus or minus may e appended to a rating to indicate the relative position of a credit ithin the rating category his is ased on itch national long term issuer default ratings b) Credit quality of financial assets he follo ing ta le sets out information a out the credit quality of financial assets measured at amortised cost, de t investments 2 1 and availa le for sale de t assets 2 1 nless specifically indicated, for financial assets, the amounts in the ta le represent gross carrying amounts
he loss allo ance for loans and advances to customers also includes the loss allo ances for loan commitments and financial guarantee contracts
Explanation of the terms ‘Stage 1’, ‘Stage 2’ and ‘Stage 3’ is included in Note 2.6.1. (iii) and 2.2.2
2019 2018 In Birr'000 Stage 1 Stage 2 Stage 3 Total Total Loans and advances to customers at amortised cost tage 1 ass , , , , ,1 2, 2 tage 2 pecial mention 1, 2 , 31 1, 2 , 31 2,5 tage 3 on performing 3 ,2 3 ,2 2 , Total gross exposure , , 1, 2 , 31 3 ,2 ,2 1,21 , 2,32 oss allo ance ,22 1 , 3 1, 1 131, 1 , 1 Net carrying amount , 1, 5 1, 12,2 2 2 5,1 3 ,1 ,33 , 1, 3
3
59 Bunna International Bank Share Company Notes to the Financial Statements Bunna or the International ear ended Bank S.C.3 une 2 1
In Birr'000 2019
Gross Loss Net carrying Other financial assets (debt instruments) exposure allowance amount ash and alances ith an s 12 onth E 1, ,6 ( ) 1, ,626 n estment securities (de t instruments) 12 onth E 3,2 , 6 (163) 3,2 ,3 ther recei a les and financial assets ifetime E 6 ,11 (1,3 2) 6 , 2 Totals , 3,3 (1, ) , 1,
In Birr'000 2018
Gross Loss Net carrying Other financial assets (debt instruments) exposure allowance amount ash and alances ith an s 1,166, 1,166, n estment securities (de t instruments) 2, 2,23 2, 2,23 ther recei a les and financial assets , (2, 1) 6, Totals ,12 , 6 (2, 1) ,12 ,
4.3.4 Collateral held and their financial effect
he general credit orthiness of a customer tends to e the most rele ant indicator of credit ualit of a loan extended to it. o e er, collateral pro ides additional securit and the an generall re uests that corporate orro ers pro ide it. Staff loans are secured to the extent of the emplo ee s continued emplo ment in the an .
he an ma ta e collateral in the form of a first charge o er real estate, commercial uilding, residential uilding, factor uilding, construction machiner , truc es ehicles and other liens and guarantees. he an does not sell or repledge the collateral in the a sence of default the o ner of the collateral. n addition to the an s focus on credit orthiness, the an aligns ith its credit polic guide to periodicall update the alidation of collaterals held against all loans to customers. or impaired loans, the an o tains appraisals of collateral ecause the fair alue of the collateral is an input to the impairment measurement.
he fair alue of the collaterals are ased on the last re aluations carried out the an s in house engineers. he aluation techni ue adopted for properties is in line ith the an s aluation manual and the re alued amount is similar to fair alues of properties ith similar si e and location.
he fair alue of collaterals other than properties such as share certificates, cash, N E ills etc. as disclosed at the carr ing amount as management is of the opinion that the cost of the process of esta lishing the fair alue of the collateral exceeds enefits accrua le from the exercise.
he an holds collateral against certain of its credit exposures. he follo ing ta le sets out the principal t pes of collateral held against different t pes of financial assets.
Collaterals held aximum Secured achiner and otor ehicles thers otal exposure to against real e uipment and ruc es credit ris estate and uildings 30-Jun-19 irr Birr'000 irr irr irr irr
griculture ,6 3 1 , 3,2 3,3 2 ,122 ransportation loan 666, 1 2 6,1 2 ,6 2, ,2 1,3 3 2, ,3 anufacturing ndustr 6, 1,1 ,62 6 ,3 3, 11, 1 1,312, omestic rade and 1,16 ,1 2 3, 16, 26 2, 2 , 1 12, 1 , 1, mportSer ices and Export 3,11 , 3 3,6 , 233,11 1 , 3 1, , , ,1 uilding and construction 1,6 , 36 2,1 6,32 1, 61, 1, 1,2 1 3, , 2, 12 ersonal non staff 1 ,33 2 6, 1, 1 , 1 , 3 311, 6 Staff oan 363, 11, 2 33, 6, 6 2,2 3 eal estate loan 26 ,36 1, 1, 3 1, 1, ealth, otel ourism 32 ,66 , 23,2 12, 3
8,281,214 14,065,031 1,626,479 4,757,898 1,683,755 22,133,163
60 Bunna International Bank Share Company Notes to the Financial Statements or the ear ended 3 une 2 1 AUDITOR’S REPORT
Collaterals held
aximum Secured achiner and otor ehicles thers otal exposure to against real e uipment and ruc es credit ris estate and uildings 30 June 2018 irr irr irr irr irr irr
griculture ,36 2 , 1 , 36, 6 ransportation loan , 3 2 1, 3 2, ,2 1 1, 2, 6 , 1 anufacturing ndustr 62 , 11 1,6 , 1 3, 1 1,12 1, 2 ,6 omestic rade and 1, 6 , 2, 16, 1 , 3 213, 3 2 ,66 3, ,2 3 mportSer ices and Export 2,16 , 1, 3 ,1 33 ,3 1 , 3,2 2,32 , 66 uilding and construction 1, 6 , 2 2, 1, 2, ,3 1 ,3 231, ,2 ,2 ersonal non staff 1,336 122, 3 2, 13,1 2 2, 1 1, 6 Staff oan 3 3, 31 33 , 2 36,326 3 3 1,6 eal estate loan 1 3, 1 21 ,1 21 ,1 ealth, otel ourism 6,22 2 6,2 , 2, 2 ,2
6,942,320 9,538,402 6,700,736 811,367 336,940 17,387,444
i) Loans and advances to corporate customers he general credit orthiness of a corporate customer tends to e the most rele ant indicator of credit ualit of a loan extended to it. o e er, collateral pro ides additional securit and the an generall re uests that corporate orro ers pro ide it.
ecause of the Bank’s focus on corporate customers’ credit orthiness, the an does not routinel update the aluation of collateral held against all loans to corporate customers. aluation of collateral is updated hen the loan is put on a atch list and the loan is monitored more closel . or credit impaired loans, the an o tains appraisals of collateral ecause it pro ides input into determining the management credit ris actions
ii) Investment securities designated as at FVTPL t 3 une 2 1 , the an had no exposure to credit ris of the in estment securities designated as at
4.3.5 Amounts arising from ECL i) Inputs, assumptions and techniques used for estimating impairment See accounting polic in Note 2.6.1.(iii)
ii) Significant increase in credit risk hen determining hether the ris of default on a financial instrument has increased significantl since initial recognition, the an considers reasona le and supporta le information that is rele ant and a aila le ithout undue cost or effort. his includes oth uantitati e and ualitati e information and anal sis, ased on the Bank’s historical experience and expert credit assessment and including for ard loo ing information
he o ecti e of the assessment is to identif hether a significant increase in credit ris has occurred for an exposure comparing — the remaining lifetime probability of default (PD) as at the reporting date; with — the remaining lifetime for this point in time that as estimated at the time of initial recognition of the exposure (ad usted here rele ant for changes in prepa ment expectations). — the Bank uses three criteria for determining whether there has been a significant increase in credit risk: — quantitative test based on movement in PD; — qualitative indicators; and — a backstop of 30 days past due
1
61 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank 30 S.C. une 0
iii) Credit risk grades he Bank allocates each e posure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of default and applying e perienced credit udgment redit risk grades are defined using qualitative and quantitative factors that are indicative of risk of default hese factors vary depending on the nature of the e posure and the type of borrower
redit risk grades are defined and calibrated such that the risk of default occurring increases e ponentially as the credit risk deteriorates so for e ample the difference in risk of default between credit risk grades and is smaller than the difference between credit risk grades and 3 ach e posure is allocated to a credit risk grade on initial recognition based on available information about the borrower posures are sub ect to ongoing monitoring which may result in an e posure being moved to a different credit risk grade he monitoring typically involves use of the following data a) Term loan exposures — Information obtained during periodic review of customer files – e.g. audited financial statements, management accounts, budgets and pro ections amples of areas of particular focus are: gross profit margins financial leverage ratios debt service coverage compliance — Data from credit reference agencies, press articles, changes in external credit ratings — ctual and e pected significant changes in the political regulatory and technological environment of the borrower or in its business activities — Internally collected data on customer behaviour — Affordability metrics
b) Overdraft/Revolving Facilities exposures — Payment record – this includes overdue status as well as a range of variables about payment ratios — Utilisation of the granted limit — Requests for and granting of forbearance — Existing and forecast changes in business, financial and economic conditions
iv) Generating the term structure of PD redit risk grades are a primary input into the determination of the term structure of PD for e posures he Bank collects performance and default information about its credit risk e posures analysed by type of product and borrower as well as by credit risk grading he Bank employs statistical models to analyse the data collected and generate estimates of the remaining lifetime PD of e posures and how these are e pected to change as a result of the passage of time
v) Determining whether credit risk has increased significantly he Bank assesses whether credit risk has increased significantly since initial recognition at each reporting date Determining whether an increase in credit risk is significant depends on the characteristics of the financial instrument and the borrower
he credit risk may also be deemed to have increased significantly since initial recognition based on qualitative factors linked to the Bank’s credit risk management processes that may not otherwise be fully reflected in its quantitative analysis on a timely basis his will be the case for e posures that meet certain heightened risk criteria such as placement on a watch list uch qualitative factors are based on its e pert udgment and relevant historical e periences
s a backstop the Bank considers that a significant increase in credit risk occurs no later than when an asset is more than 30 days past due Days past due are determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received Due dates are determined without considering any grace period that might be available to the borrower
f there is evidence that there is no longer a significant increase in credit risk relative to initial recognition then the loss allowance on an instrument returns to being measured as month ome qualitative indicators of an increase in credit risk such as delinquency or forbearance may be indicative of an increased risk of default that persists after the indicator itself has ceased to e ist n these cases the Bank determines a probation period during which the financial asset is required to demonstrate good behavior to provide evidence that its credit risk has declined sufficiently hen contractual terms of a loan have been modified evidence that the criteria for recogni ing lifetime are no longer met includes a history of up to date payment performance against the modified contractual terms
62 Bunna International Bank Share Company Notes to the Financial Statements or the year ended une AUDITOR’S REPORT
he Bank monitors the effectiveness of the criteria used to identify significant increases in credit risk by regular reviews to confirm that the criteria are capable of identifying significant increases in credit risk before an exposure is in default the criteria do not align with the point in time when an asset becomes days past due the average time between the identification of a significant increase in credit risk and default appears reasonable exposures are not generally transferred directly from month E measurement to credit impaired and there is no unwarranted volatility in loss allowance from transfers between month PD tage and lifetime PD tage .
vi) Definition of default he Bank considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Bank in full, without recourse by the Bank to actions such as realising security if any is held the borrower is more than days past due on any material credit obligation to the Bank. verdrafts are considered as being past due once the customer has breached an advised limit or been advised of a limit smaller than the current amount outstanding or it is becoming probable that the borrower will restructure the asset as a result of bankruptcy due to the borrower’s inability to pay its credit obligations. In assessing whether a borrower is in default, the Bank considers indicators that are qualitative e.g. breaches of covenant quantitative e.g. overdue status and non payment on another obligation of the same issuer to the Bank based on data developed internally and obtained from external sources. Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time to reflect changes in circumstances
he definition of default largely aligns with that applied by the Bank for regulatory capital purposes vii) Incorporation of forward-looking information he Bank incorporates forward looking information into both the assessment of whether the credit risk of an instrument has increased significantly since its initial recognition and the measurement of E or each segment, the Bank formulates three economic scenarios a base case, which is the median scenario, and two less likely scenarios, one upside and one downside. or each sector, the base case is aligned with the macroeconomic model’s information value output, a measure of the predictive power of the model, as well as base macroeconomic pro ections for identified macroeconomic variables for each sector. he upside and downside scenarios are based on a combination of a percentage error factor of each sector model as well as simulated optimistic and pessimistic macroeconomic pro ections based on a measure of historical macroeconomic volatilities.
External information considered includes economic data and forecasts published by Business onitor International, an external and independent macroeconomic data body. his is in addition to industry – level, semi – annual P trends across statistically comparable sectors
Periodically, the Bank carries out stress testing of more extreme shocks to calibrate its determination of the upside and downside representative scenarios. A comprehensive review is performed at least annually on the design of the scenarios by a panel of experts that advises the Bank’s senior management
he Bank has identified and documented key drivers of credit risk and credit losses for each portfolio of financial instruments and, using an analysis of historical data, has estimated relationships between macro economic variables and credit risk and credit losses
63 Bunna International Bank Share Company Notes to the Financial Statements orBunna the earInternational ended Bank S.C. ne
The key drivers for credit risk for each of the Bank’s economic sectors is summarized below Sector/Product Macroeconomic factors gri lt re and ta loans B ons mer overnment o sehold ri e inde B ave orts o goods domesti debt ending and servi es Bbn Bbn ave er a ita omesti rade ervi es and rans ort er otal a ita ons mer ri e B reven e m orts o inde ave bn goods and eo servi es bn B ilding onstr tion and an a t ring B nd str rrent overnment orts o e endit re domesti debt goods and bn Bbn servi es er a ita ort and m ort B otal eal government orts o m orts o e e tive rivate inal debt bn goods and goods and e hange rate ons m tion servi es servi es inde bn Bbn Bbn
he e onomi s enarios sed as at ne in l ded the ollowing ke indi ators or thio ia or the ears to
Macro-economic factor 2019 2020 2021 INFLATION: Consumer price index, 2010 = 100 317.40 349.10 384.00 GDP: GDP per capita, USD 836.00 928.00 1019.00 GDP EXPENDITURE: Exports of goods and services, USD per capita 54.90 59.80 66.60 GDP EXPENDITURE: Exports of goods and services, ETBbn 179.80 213.80 260.30 EXCHANGE RATE: ETB/USD 29.23 31.10 33.15 GDP EXPENDITURE: Imports of goods and services, USDbn 16.60 16.90 17.10 FISCAL: Current expenditure, USDbn 7.80 8.30 8.90 GDP EXPENDITURE: Imports of goods and services, ETBbn 485.30 526.50 568.40 INFLATION: Consumer price index, 2010 = 100 296.30 326.00 358.60 DEBT: Government domestic debt, ETBbn 642.70 752.00 872.30 EXCHANGE RATE: Real effective exchange rate, index 123.13 121.01 117.74 GDP EXPENDITURE: Private final consumption, USDbn 58.90 66.20 73.50 STRATIFICATION: Household Spending, ETBbn 1707.60 1926.30 2149.30 FISCAL: Total revenue, USDbn 10.50 10.90 11.40 DEBT: Total government debt, USDbn 57.00 65.20 75.40
redi ted relationshi s between the ke indi ators and de a lt rates on vario s ort olios o inan ial assets have been develo ed based on analysing semi – annual historical data over the past 5 years
64 Bunna International Bank Share Company Notes to the Financial Statements or the year ended une AUDITOR’S REPORT
viii) Modified financial assets The contractual terms of a loan may be modified for a number of reasons including changing market conditions customer retention and other factors not related to a current or potential credit deterioration of the customer n e isting loan whose terms have been modified may be derecognized and the renegotiated loan recognized as a new loan at fair value in accordance with the accounting policy set out hen the terms of a financial asset are modified and the modification does not result in derecognition the determination of whether the asset’s credit risk has increased significantly reflects comparison of its remaining lifetime at the reporting date based on the modified terms with the remaining lifetime estimated based on data on initial recognition and the original contractual terms hen modification results in derecognition a new loan is recognized and allocated to tage assuming it is not credit impaired at that time
The Bank renegotiates loans to customers in financial difficulties referred to as ‘forbearance activities’) to ma imise collection opportunities and minimize the risk of default nder the Bank’s forbearance policy loan forbearance is granted on a selective basis if the debtor is currently in default on its debt or if there is a high risk of default there is evidence that the debtor made all reasonable efforts to pay under the original contractual terms and the debtor is e pected to be able to meet the revised terms
The revised terms usually include e tending the maturity changing the timing of interest payments and amending the terms of loan covenants Both retail and corporate loans are sub ect to the forbearance policy The Bank redit ommittee regularly reviews reports on forbearance activities
or financial assets modified as part of the Bank’s forbearance policy the estimate of reflects whether the modification has improved or restored the Bank’s ability to collect interest and principal and the Bank’s previous e perience of similar forbearance action s part of this process the Bank evaluates the borrower’s payment performance against the modified contractual terms and considers various behavioural indicators
enerally forbearance is a ualitative indicator of a significant increase in credit risk and an e pectation of forbearance may constitute evidence that an e posure is credit impaired customer needs to demonstrate consistently good payment behaviour over a period of time before the e posure is no longer considered to be credit impaired in default or the is considered to have decreased such that the loss allowance reverts to being measured at an amount e ual to tage
ix) Measurement of ECL The key inputs into the measurement of are the term structure of the following variables probability of default loss given default and e posure at default for e posures in tage is calculated by multiplying the month by and ifetime is calculated by multiplying the lifetime by and The methodology of estimating s is discussed above under the heading ‘Generating the term structure of PD’. is the magnitude of the likely loss if there is a default The Bank estimates parameters based on the history of recovery rates of claims against defaulted counterparties The models consider the structure collateral seniority of the claim counterparty industry and recovery costs of any collateral that is integral to the financial asset represents the e pected e posure in the event of a default The Bank derives the from the current e posure to the counterparty and potential changes to the current amount allowed under the contract and arising from amortisation The of a financial asset is its gross carrying amount at the time of default or lending commitments the s are potential future amounts that may be drawn under the contract which are estimated based on historical observations and forward looking forecasts or financial guarantees the represents the amount of the guaranteed e posure when the financial guarantee becomes payable or some financial assets is determined by modelling the range of possible e posure outcomes at various points in time using scenario and statistical techni ues s described above and sub ect to using a ma imum of a month for tage financial assets the Bank measures considering the risk of default over the ma imum contractual period including any borrower’s e tension options over which it is e posed to credit risk even if for credit risk management purposes the Bank considers a longer period The ma imum contractual period e tends to the date at which the Bank has the right to re uire repayment of an advance or terminate a loan commitment or guarantee
5
65 Bunna International Bank Share Company Notes to the Financial Statements orBunna t e International ear en e Bank S.C. ne
owever for over rafts t at inc e bot a oan an an n rawn co it ent co onent t e Bank eas res over a erio onger t an t e a i contract a erio if t e Bank’s contract a abi it to e an re a ent an cance t e n rawn co it ent oes not i it t e Bank’s e os re to cre it osses to t e contract a notice erio . ese faci ities o not ave a fi e ter or re a ent str ct re an are anage on a co ective basis. e Bank can cance t e wit i e iate effect b t t is contract a rig t is not enforce in t e nor a a to a anage ent b t on w en t e Bank beco es aware of an increase in cre it risk at t e faci it eve . is onger erio is esti ate taking into acco nt t e cre it risk anage ent actions t at t e Bank e ects to take an t at serve to itigate . ese inc e a re ction in i its cance ation of t e faci it an or t rning t e o tstan ing ba ance into a oan wit fi e re a ent ter s
ere o e ing of a ara eter is carrie o t on a co ective basis t e financia instr ents are gro e on t e basis of s are risk c aracteristics t at inc e instr ent t e cre it risk gra ing co atera t e ratio for retai ortgages ate of initia recognition re aining ter to at rit in str an geogra ic ocation of t e borrower. e gro ings are s b ect to reg ar review to ens re t at e os res wit in a artic ar gro re ain a ro riate o ogeneo s x) Loss allowance e fo owing tab es s ow reconci iations fro t e o ening to t e c osing ba ance of t e oss a owance b c ass of financia instr ent. o arative a o nts for re resent t e a owance acco nt for cre it osses an ref ect t e eas re ent basis n er
2019 In Birr'000 Stage 1 Stage 2 Stage 3 Total Loans and advances to customers at amortised cost (on balance sheet exposures) Balance as at 1 July 2018 47,596 39,915 13,206 100,717 Da one transition a st ent ) ) (19,049) Adjusted balance at 1 July 2018 34,686 7,681 39,301 81,668 ransfer to stage ont s ) ) ) ransfer to stage ifeti e not cre it i aire ) ) ) ransfer to stage ifeti e cre it i aire ) ) ) et re eas re ent of oss a owance ) ew financia assets originate inancia assets erecognise ) ) ) ) Balance as at 30 June 2019 46,229 14,639 71,016 131,884
66 Bunna International Bank Share Company Notes to the Financial Statements a n n AUDITOR’S REPORT
2019 In Birr'000 Stage 1 Stage 2 Stage 3 Total Letter of credit and financial guarantee contracts (off balance sheet exposures) Balance as at 1 July 2018 a n ans n a s n 193 Adjusted balance at 1 July 2018 193 193 ans s a n s ans s a n a ans s a a as n ss a an nan a ass s na as 104 nan a ass s n s (192) Balance as at 30 June 2019 104 104
2019 as an n s n a s a an s s s an nan a In Birr'000 anks ns n s ass s a Other financial assets (debt instruments) Balance as at 1 July 2018 2,981 a n ans n a s n (2,141) Adjusted balance at 1 July 2018 63 144 633 840 as n ss a an 719 Balance as at 30 June 2019 54 163 1,342 1,559
n a s a n a n n a n s s n n a a s n n n n an s n a an s ss a an ass nan a ns n an ‘impairment ss s n nan a instruments’ n n ns a s a n ss an ns n
67 Bunna International Bank Share Company Notes to the Financial Statements r t e ear en e une Bunna International Bank S.C.
ans an etter re it a an es t inan ia t er re e ia es ust mers at uarantee an inan ia ta n irr am rtise st ntra ts assets ar e re it et remeasurement ss a an e e inan ia assets ri inate r pur ase inan ia assets ere nise m unts ire t ritten urin t e ear e eries am unts pre i us ritten Total 50,216 (89) 719 50,847
4.3.6 Impaired financial assets – Comparative information under IAS 39(June 30,2018)
ans an ans an n estment In millions of ETB a an es t a an es t an s se urities ust mers
r ss arr in am unt mpaire am unt an e r impairment et arr in am unt 6,841,603 2,872,237 Neither past due nor impaired ra es ass Past due but not impaired 30–90 days 91–180 days a s a s 6,942,320 2,872,237
Allowance for impairment n i i ua spe i i e ti e Total allowance for impairment 100,717
— Loans that were past due but not impaired ans t at ere ‘past ue ut n t impaired’ are t se r i ntra tua interest r prin ipa pa ments ere past ue ut t e an e ie e t at impairment as n t appr priate n t e asis t e e e se urit r atera a ai a e an r t e sta e e ti n am unts e t t e an e am unts is se e u e assets measure at
4.3.7 Concentrations of credit risk
e an m nit rs n entrati ns re it ris e n mi se t r n ana sis n entrati ns re it ris r m ans an a an es an mmitments inan ia uarantees an in estment se urities is s n e
68 Bunna International Bank Share Company Notes to the Financial Statements or the year ended 30 June 2019 AUDITOR’S REPORT
Amount Amount (2019) (2018) Gross Carrying amount Loans Advances to customers 8,281,21 ,9 2,320 Investment securities uity Investment at CI(2018 A S) 3,813 2,002 financial asset at amorti ed Cost( ills onds) 3,2 9, 0 2,8 2,23 ther receviables financial asset 9,11 89, 8 Amount committed uaranteed 3,91 ,213 ,81 ,12 Concentration by sector for Equity Investment inancial Institiutions 1,313 32,002 Industry 12, 00 10,000 3,813 2,002 Concentration by sector for loans to custmers A riculture , 3 8,3 ransportation ,8 1 90 , 03 anufacturin industry ,0 2 ,011 omestic trade and services 1, 93, 0 1,13 ,121 Import and e port 3,118,0 3 2,1 8, 80 uildin and construction 2,0 , 3 1, 2 , 10 Staff Loan 3 3, 09 3 3,031 8,281,214 6,942,320
4.3.8 Offsetting financial assets and financial liabilities he an does not offset financial assets a ainst financial liabilities 4.3.9 Financial assets and financial liabilities i) Classification of financial assets and financial liabilities he followin table shows the ori inal measurement cate ories and amounts in accordance with IAS 39 as at 30 June 2018 and the new measurement categories and amounts under IFRS 9 for the Bank’s financial assets and financial liabilities as at 1 July 2018.
Birr'000 30-Jun-18 Initial adjustments 1-Jul-18 ri inal ri inal ew ew carryin carryin classification classification e classification e measurement amount under inancial assets(net amount under under IAS 39 under I S 9 I S 9 carryin amount) IAS 39 Loans and Amortised Cash and ban balances receivables cost 2, 9,83 ( 3) 2, 9, 2 Loans and advances to Loans and Amortised customers receivables cost ,8 1, 03 19,0 9 ,8 0, 2 Investment securities Available for uity Investment sale CI 2,002 (8 3) 1,1 9 Investment securities ills Loans and Amortised onds receivables cost 2,8 2,23 (1 ) 2,8 2,093 ther receviables and Loans and Amortised financial assets receivables cost 8 , 9 2,3 8 89,1 Total financial assets 12,512,474 - 20,337 12,532,811
Financial liabilities Amortised eposits from customers Amortised cost cost 9,1 3,2 1 9,1 3,2 1 ue to other financial Amortised institutions Amortised cost cost 9 ,113 9 ,113 Amortised orrowin s Amortised cost cost 2 , 1 2 , 1
ther financial commitment (includin Letter of credit Amortised and financial uarantees) Amortised cost cost 1, 10,09 (193) 1, 09,901 Total 11,382,183 - (193) 11,381,990
9
69 Bunna International Bank Share Company Notes to the Financial Statements ForBunna the International year ended Bank 0S.C. June 2019
he Bank’s accounting olicies on the classification of financial instruments under IFRS 9 are set out in ote 2.2.2 he a lication of these olicies resulted in the reclassifications set out in the table abo e and e lained below. n the ado tion of IFRS 9 certain financial assets such as cash and cash e ui alents loans and ad ances to customers – both interest bearing and interest free and treasury bills and bonds B bills and go ernment bonds were reclassified out of the loans and recei able to amorti ed cost. he carrying amount of those assets was ad usted so that their amortised cost under IFRS 9 was as if those assets were accounted for at amortised cost from their ince tion. Further e uity in estment securities were reclassified out of a ailable for sale categories to F I at their then fair alues. he carrying amount of those assets was ad usted so that their fair alue under IFRS 9 was as if those assets were accounted for at fair alue from their ince tion. n the ado tion of IFRS 9 other financial assets such as accounts recei ables uncleared effects – both local and foreign were reclassified out of the loans and recei able to amorti ed cost. he carrying amount of those assets was ad usted so that their amortised cost under IFRS 9 was as if those assets were accounted for at amortised cost from their ince tion.
he following table summarises the im act of transition to IFRS 9 on the o ening balance of the fair alue reser e I regulatory risk reser e and retained earnings. Impact of adopting IFRS 9 In Birr'000 at 1 July 2018 Fair value reserve losing balance under I S 9 0 June 2018 Reclassification of in estment securities e uity measured at cost from a ailable for sale to F I 8 Adjusted opening balance under IFRS 9 (1 July 2018) (853)
Regulatory risk reserve (difference between IFRS and NBE provisions) losing balance under I S 9 0 June 2018 9 1 8 Recognition of e ected credit losses under IFRS 9 on loans and ad ances to customers on balance sheet 19 0 9 Recognition of e ected credit losses under IFRS 9 on other rece iables financial asset 2 8 Adjusted opening balance under IFRS 9 (1 July 2018) 60,555 Retained earnings losing balance under I S 9 0 June 2018 20 9 Recognition of e ected credit losses under IFRS 9 on other financial assets such as bank balances and in estment securities 20
Recognition of e ected credit losses under IFRS 9 on letter of credit and financial guarantee 19 Adjusted opening balance under IFRS 9 (1 July 2018) 204,080
4.4 Liquidity risk
i uidity risk is the risk that the Bank cannot meet its maturing obligations when they become due at reasonable cost and in a timely manner. i uidity risk arises because of the ossibility that the Bank might be unable to meet its ayment obligations when they fall due as a result of mismatches in the timing of the cash flows under both normal and stress circumstances. Such scenarios could occur when funding needed for illi uid asset ositions is not a ailable to the Bank on acce table terms.
i uidity risk management in the Bank is solely determined by sset and iability ommittee which bears the o erall res onsibility for li uidity risk. he main ob ecti e of the Bank s li uidity risk framework is to maintain sufficient li uidity in order to ensure that we meet our maturing obligations.
4.4.1 Management of liquidity risk
i uidity risk arises in the general funding acti ities of the Bank and the management of ositions. It includes the risk of being unable to fund assets at a ro riate maturities and rates and the risk of being unable to li uidate an asset at a reasonable rice and in an appropriate time frame. The Bank has a reasonable funding base. Funds are raised mainly from customers’ deposits.
n asset and liability management committee is res onsible for managing funding mismatches and attaining the desired le el of li uidity in the manner described in the risk management olicy.
0
70 Bunna International Bank Share Company Notes to the Financial Statements For the year ended une AUDITOR’S REPORT
4.4.2 Maturity analysis of financial liabilities
The table belo analyses the Bank’s financial liabilities into rele ant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The cash flo s presented are the undiscounted amounts to be settled in future. er days days days days year Total 30 June 2019 Birr Birr Birr Birr Birr Birr
eposit from customers ue to financial institutions ther liabilities
Total financial liabilities
er days days days days year Total 30 June 2018 Birr Birr Birr Birr Birr Birr
eposit from customers ue to financial institutions ther liabilities
Total financial liabilities
4.5 Market risk
arket risk is defined as the risk of loss that the fair alue or future cash flo s of a financial instrument ill fluctuate because of changes in market risk factors such as interest rates foreign e change rates e uity prices credit spreads and their olatilities. arket risk can arise in con unction ith trading and non trading acti ities of a financial institutions.
The Bank does not ordinarily engage in trading acti ities as there are no acti e markets in thiopia.
4.5.1 Management of market risk
The main ob ecti e of market risk management is to manage and control market risk e posures ithin acceptable parameters hile optimising the return on risk.
arket risk is monitored by the risk management department on regularly to identify any ad erse mo ement in the underlying ariables.
(i) Interest rate risk
nterest rate risk is a risk resulting from changes in interest rates. t is the probability that the rising and falling of interest rates ill ad ersely affect the Bank’s interest margin or the alue of its net orth. The Bank often re ises its lending rate across segments of the credit portfolio based on the changes in the cost of funds reser e re uirements and the percei ed risk in each credit portfolio segment to keep the o erall profitability.
The asset and liability management committee is responsible for managing rate sensiti e assets and liabilities and the effects of rate olume and mi changes in order to preser e and optimise the interest return. The Bank has the discretion of setting and re ising interest rates but it is re uired to notify the ational Bank of thiopia of any such changes accompanied by Board appro als.
71 Bunna International Bank Share Company Notes to the Financial Statements Bunna International a n Bank S.C. n
Non-interest 30 June 2019 Fixed bearing Total Birr'000 Birr'000 Birr'000 Assets as an ank a an s ans an a an s s s nan a ass s a a a nan a ass s a a s a s nan a ass s Total
Liabilities s s s nan a ns ns B n a s Total
Non-interest 30 June 2018 Fixed bearing Total Birr'000 Birr'000 Birr'000 Assets as an ank a an s ans an a an s s s n s n s s a a sa ans an a s ass s Total
Liabilities s s s nan a ns ns B n a s Total
(ii) Foreign exchange risk
n an sk s sk a a a as s a nan a ns n a an s n n an a s
Bank s s an a sks n a an s an ansa ns n na n a n an an B Bank’s n n ank a n s a as a na a s ansa ns ana n as s a ana Bank s n an sk a a ns s n na n
a s a s s a n as s as s n ss a s n Bank s n n na ass a s
a n n n na ass s an a s s sk as a a n as B n n B n
72 Bunna International Bank Share Company Notes to the Financial Statements a n n AUDITOR’S REPORT
Foreign currency denominated balances
30 June 2019 USD GBP EURO AED SAR Total Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Financial assets
as an ank a an s ass s Financial liabilities
s s s a s Net FCY denominated balances
30 June 2018 USD GBP EURO AED SAR Total Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Birr'000 Financial assets
as an ank a an s ass s Financial liabilities
s s s a s Net FCY denominated balances
73 Bunna International Bank Share Company Notes to the Financial Statements a n n Bunna International Bank S.C.
4.5.2 Sensitivity analysis for foreign exchange risk
s ns ana s s n a sk s s an s n a a as s a nan a ns n a a s an s n a k a s a n a
s ns Bank s a n n s a ns n an a s s a n an a s a as s n 30 June 30 June 2019 2018 Birr'000 Birr'000 n as n n ss as n n ss
30 June 30 June 2019 2018 Birr'000 Birr'000 n as n B n ss as n B n ss
30 June 30 June 2019 2018 Birr'000 Birr'000 n as n n ss as n n ss
30 June 30 June 2019 2018 Birr'000 Birr'000 n as n n ss as n n ss 30 June 30 June 2019 2018 Birr'000 Birr'000 n as n n ss as n n ss
4.6 Capital management
The Bank’s objectives when managing capital are:
• sa a Bank’s a n n as a n n n s a an n n ns s a s an n s s ak s • To maintain a strong capital base to support the current and future development needs of the business. • To comply with the capital requirements set by the National Bank of Ethiopia (NBE).
74 Bunna International Bank Share Company Notes to the Financial Statements or the year ended une AUDITOR’S REPORT
4.6.1 Regulatory capital
apital adequacy and use of regulatory capital are monitored by management employing techniques based on the guidelines developed by the National Bank of Ethiopia for supervisory purposes. The required information is filed with the National Bank of Ethiopia on a monthly basis. ith effect from eptember the National Bank of Ethiopia requires that:
i) The minimum paid up capital required to obtain a Banking business license shall be ETB million which shall be fully paid in cash and deposited in a Bank in the name and to the account of the Bank under establishment. or e isting Banks whose paid up capital is below ETB million shall raise their paid up capital to the said amount by une . ccordingly the bank has already superpassed the limit ii) The Bank at a minimum maintains a capital to risk weighted assets ratio of at all times. The Bank is also required to maintain a legal reserve which is a statutory reserve to which not less than of the net profits after ta ation shall be transferred each year until such fund is equal to the capital. hen the legal reserve account equals the capital of the Bank the amount to be transferred to the legal reserve account shall be of the annual net profit.
The Bank had met all the above requirements by the National Bank of Ethiopia as at une and une . The makeup of the Bank’s capital is as presented in the statement of changes in equity. The Bank’s policy is to maintain a strong capital base so as to maintain investor creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.
There have been no material changes in the Bank’s management of capital during the period.
4.6.2 Capital adequacy ratio
ccording to the icensing upervision of Banking Business irective No BB of the National Bank of Ethiopia the Bank has to maintain capital to risk weighted assets ratio of at all times the risk weighted assets being calculated as per the provisions of irective No BB issued on ugust .
The capital adequacy ratio is the quotient of the capital base of the Bank and the Bank’s risk weighted asset base. 30 June 30 June 2019 2018 Birr'000 Birr'000
Capital hare capital hare premium etained earnings ther comprehensive income ( ) egal reserve pecial reserve egulatory risk reserve
Risk weighted assets On balance sheet items laims on domestic and foreign banks ess than year oans and advances to customers inancial assets at fair value through ( ) roperty plant and equipment ntangible assets Non current assets held for sale ther assets
75 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank S.C. une
Off balance sheet items oan commitment etter of credit net of margin held uarantees
Total Risk weighted Assets (RWA) 10,919,846 10,019,422
Risk-weighted Capital Adequacy Ratio (CAR) Total capital e pressed as age of . . rimery capital e pressed as age of . .
4.7 Fair value of financial assets and liabilities
requires an entity to classify measured or disclosed fair values according to a hierarchy that reflects the significance of observable inputs.
ll assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy which comprises of three levels as described below based on the lowest level input that is significant to the fair value measurement as a whole.
4.7.1 Valuation models
specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. bservable input reflect market data obtained from independent sources unobservable inputs reflect the Bank s market assumptions.
ll assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy described as follows based on the lowest level input that is significant to the fair value measurement as a whole.
● Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical assets or liabilities.
●Level nputs other than quoted prices included within evel that are observable for the asset or liability either directly i.e. as prices or indirectly i.e. derived from prices .This category includes instruments valued using quoted market prices in active markets for similar instruments quoted prices for identical or similar instruments in markets that are considered less than active or other valuation technique in which all significant inputs are directly or indirectly observable from market data.
n conclusion this category is for valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
● evel nputs for the asset or liability that are not based on observable market data unobservable inputs . This category includes all assets and liabilities for which the valuation technique includes inputs not based on observable date and the unobservable inputs have a significant effect on the asset or liability s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable ad ustments or assumptions are required to reflect differences between the instruments.
76 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. bservable input reflect market data obtained from independent sources unobservable inputs reflect the Bank s market assumptions.
ll assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy described as follows based on the lowest level input that is significant to the fair value measurement as a whole.
● Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical assets or liabilities.
●Level nputs other than quoted prices included within evel that are observable for the asset or liability either directly i.e. as prices or indirectly i.e. derived from prices .This category includes instruments valued using quoted market prices in active markets for similar instruments quoted prices for identical or similar instruments in markets that are considered less than active or other valuation technique in which all significant inputs are directly or indirectly observable from market data.
n conclusion this category is for valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
● evel nputs for the asset or liability that are not based on observable market data unobservable inputs . This category Bunnaincludes Internationalall assets and liabilities for Bankwhich the Sharevaluation techniqueCompanyincludes inputs not based on observable date and the unobservable inputs have a significant effect on the asset or liability s valuation. This category includes instruments that are valued Notesbased toon thequoted Financialprices for similar Statementsinstruments for which significant unobservable ad ustments or assumptions are required to reflect differences between the instruments. or the year ended une AUDITOR’S REPORT
4.7.2 Financial instruments not measured at fair value - Fair value hierarchy
The following table summarises the carrying amounts of financial assets and liabilities not measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position.
30 June 2019 30 June 2018 Gross Net Gross Net Carrying Carrying Carrying Carrying amount amount amount amount Financial assets Birr'000 Birr'000 Birr'000 Birr'000 ash and bank balances oans advances to customers inancial assets at amorti ed cost ther financial assets Total
Financial liabilities eposit from customers ue to financial institutions ther financial liabilities Total
Financial instruments measured at fair value The following table summarises the carrying amounts and fair value of financial assets measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position.
30 June 2018 30 June 2019 (re-estated July 1,2018) Carrying Carrying Carrying Carrying amount amount amount amount at cost at Fairvalue at cost at Fairvalue Birr'000 Birr'000 Birr'000 Birr'000
inancial assets at fair value through 47,986 63,813 42,002 41,149
s per requirment and intial application investment on equity which was measured at cost as of une is re measured at fair value as of uly
4.7.3 Valuation technique using significant unobservable inputs
The Bank s investment on equity has measured at fair value on subsequent recognition.
4.7.4 Transfers between the fair value hierarchy categories
uring the two reporting periods covered by these annual financial statements there were no movements between levels as a result of significant inputs to the fair valuation process becoming observable or unobservable.
4.8 Offsetting financial assets and financial liabilities
There are no offsetting arrangements. inancial assets and liabilities are settled and disclosed on a gross basis.
77 Bunna International Bank Share Company Notes to the Financial Statements ForBunna the International year ended Bank 30 S.C.June 2019
30 June 2019 30 June 2018 Birr'000 Birr'000 5 Interest income
Loans and advances to customers 1,182,633 958,828 Investment securities 96,940 73,406 Cash and cash equivalents 2,375 318
1,281,948 1,032,553
Interest income on loans and advances to customers for the Bank includes interest income on impaired financial assets of Birr 13.43 million(2018: Birr 19.53 million), recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
30 June 2019 30 June 2018 Birr'000 Birr'000 6 Interest expense
Savings deposits 325,345 207,201 Fixed time deposits 109,165 179,292 Overdrafts 864 2,905 Leasedhold Land 4,427
439,801 389,398
30 June 2019 30 June 2018 Birr'000 Birr'000 7 Net fee and commission income
Fee and commission income Letter of guarantee 105,006 106,450 Service charge 202,576 107,096 Letter of credit 102,279 42,251 Other services 4,113 3,653 Cash payment orders 1,377 1,298 415,351 260,749 Fee and commission expense - -
Net fees and commission income 415,351 260,749
30 June 2019 30 June 2018 Birr'000 Birr'000 8 Other operating income
Divedend Income on Equity Investment 3,530 - Loan administration fee 34,746 22,519 Estimation and inspection fee 1,437 1,522 Swift charge 1,299 874 Disposal of property, plant and equipment 257 692 Disposal of acquired properties (268) 0 Sundries 16,991 10,314
57,993 35,922
30 June 2019 30 June 2018 Birr'000 Birr'000 9 Impairment charge
Impairment loss expense Loans and advances to customers 50,215 40,738 Impiarment loss expense-NBE Bills & Bonds 19 Impiarment loss expense-Financial Gurantee (103) Impiarment loss expense-Letter of Credit 14 Impiarment loss expense-Bank Deposit (9) Impairment loss expense other receivables 709 1,983
50,846 42,721
58
78 Bunna International Bank Share Company Notes to the Financial Statements For the year ended 30 June 2019 AUDITOR’S REPORT
30 June 2019 30 June 2018 Birr'000 Birr'000 10 Net gain on foreign exchange
Gain on foreign exchange dealing & revaluation 128,086 239,069 Loss on foreign exchange dealing & revaluation (50,985) (175,879)
77,101 63,190
30 June 2019 30 June 2018 Birr'000 Birr'000 11 Administration and general expenses
Rent 122,615 100,841 Amortisation of leasehold land 1,148 1,147 Stationery and office supplies 13,492 8,323 Business travel and transportation 3,597 2,837 Perdiem and travel 3,509 2,619 Telephone, internet and fax 8,245 10,522 Repair and maintenance 6,171 5,624 Insurance premium 4,415 3,771 Fuel and lubricant 7,208 6,173 Core banking solution technical support fee 4,569 3,088 Conference and meeting 2,615 1,869 Inaguration 0 166 Utilities 1,332 895 Correspondent's charges 561 284 Advertisement/ publicity 20,625 17,484 Donation and contribution 10,256 223 Subscription and publication 249 183 Consultancy fees 1,819 793 Bank charges 7,104 1,823 Directors allowance 1,301 634 Security and janitorial service 44,185 36,872 Audit fee 248 255 Entertainment 1,543 2,544 Other administrative expenses 9,051 5,281
275,859 214,253
30 June 2019 30 June 2018 Birr'000 Birr'000 12 Personnel expenses
Shaort term employee benefits: Basic salaries 234,516 170,263 Staff allowances 9,296 7,879 Training and education 16,449 7,262 Leave pay 8,249 11,516 Medical 4,321 3,110 Staff insurance 1,521 982 Bonus 50,000 34,300 Overtime payment 7,930 6,766 Post employement benefits: Severance pay (note 26) 3,600 1,707 Provident/ pension fund 30,091 21,867 Other allowances and benefits 34,926 20,646
400,899 286,299
59
79 Bunna International Bank Share Company Notes to the Financial Statements BunnaFor the International year ended Bank 30 S.C. June 2019
30 June 2019 30 June 2018 Birr'000 Birr'000 13 Company income and deferred tax 13a Current income tax
Company income tax 165,246 112,685 Deferred income tax/(credit) to profit or loss (1,582) (720)
Total charge to profit or loss 163,664 111,965 Tax (credit) on other comprehensive income (2,384) (1,548) Total tax in statement of comprehensive income 161,280 110,417
13b Reconciliation of effective tax to statutory tax
The tax on the Bank’s profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows:
30 June 2019 30 June 2018 Birr'000 Birr'000 Profit before tax 625,031 427,228
Add: Disallowed expenses Entertainment 1,543 2,544 Donation 256 223 Severance expense 3,600 1,707 Penalty 537 541 Employee Allowance in excess of tax exeption 361 85 Gain on Disposal of PPE-IFRS (257) Gain on Disposal of PPE-Per Tax 369 Provision for other claims 709 1,983 Impairment Loss Expense for NBE bIlls & Deposit 10 Impairment Loss Expense for Guarntee & LC (89) Provision for loans and advances IFRS accounting 50,215 40,738 Depreciation for accounting purpose 32,800 26,230 Amortization for accounting purpose 7,156 6,283 Total disallowable expenses 97,211 80,333
Less: Allowed expenses Depreciation for tax purpose 37,018 31,262 Provision for loans and advances tax purpose (80% of NBE) 19,654 24,796 Provision for other claims (80% of NBE) 10,531 1,586 Severance pay-paid 1,375 557 Interest income exempted- NBE Bills 96,940 73,424 Interest income taxed at source- local deposit 2,375 318 Divedend Income on Equity Investment 3,530 Total allowed expenses 171,422 131,944
Taxable profit 550,820 375,617
Current tax at 30% 165,246 112,685 Deferred tax (1,582) (720) Income tax expense/ (credit) recognised in profit or loss 163,664 111,965
30 June 2019 30 June 2018 13c Current income tax liability Birr'000 Birr'000
Balance at the beginning of the year 94,976 46,169 Income tax expense 165,246 112,685 WHT Notes utilised Payment during the year (94,976) (63,878)
Balance at the end of the year 165,246 94,976
All tax payable are current in nature.
60
80 Bunna International Bank Share Company Notes to the Financial Statements or the year ended une AUDITOR’S REPORT
13d Deferred income tax
eferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be a ailable against which the temporary differences can be utilised
30 June 2019 30 June 2018 Birr'000 Birr'000
The analysis of deferred tax assets/(liabilities) is as follows: To be reco ered after more than months To be reco ered within months
eferred income tax assets and liabilities deferred income tax charge credit in profit or loss in e uity and other comprehensi e income are attributable to the following items:
Credit/ (charge) Credit/ (charge) Deferred income tax At 1 July to P/L to equity assets/(liabilities): 2018 30 June 2019 Birr'000 Birr'000 Birr'000 Birr'000
roperty plant and e uipment ost employment benefit obligation Total deferred tax assets/(liabilities)
Deferred income tax At 1 July Credit/ (charge) Credit/ (charge) assets/(liabilities): 2017 to P/L to equity 30 June 2018 Birr'000 Birr'000 Birr'000 Birr'000
roperty plant and e uipment ost employment benefit obligation Total deferred tax assets/(liabilities)
30 June 2019 30 June 2018 Birr'000 Birr'000 14 Cash and bank balances
ash in hand Balance held with ational Bank of thiopia eposits with local banks eposits with foreign banks
14a Impairment allowance on Bank Deposit mpiarment oss llowance on Bank eposit
et ash and bank balance 2,284,780 2,669,835
Maturity analysis 30 June 2019 30 June 2018 Birr'000 Birr'000
urrent on current
or the purpose of the cash flow statement cash and cash e ui alents comprise of cash in hand cash at bank short term deposit with banks and net of o erdraft ash and cash e ui alent does not include restricted cash with B birr million which is not a ailable for use by the bank for normal day to day cash operations s per intial application impairment loss allowance is computed for bank deposits t intial application as at uly Birr was held and as une a re ersal of Birr is re uired and the total impiarment loss allowance as of une become Birr
81 Bunna International Bank Share Company Notes to the Financial Statements orBunna the International year ended Bank S.C. une
Cash and cash equivalents 30 June 2019 30 June 2018 Birr'000 Birr'000 ash in hand Balance held with ational Bank of thiopia eposits with local banks eposits with foreign banks Bank o erdrafts
30 June 2019 30 June 2018 Birr'000 Birr'000 15 Loans and advances to customers
griculture Transportation loan anufacturing industry omestic trade and ser ices mport and export Building and construction ersonal non staff taff oan eal estate loan ealth otel Tourism Gross amount ess: mpairment allowance note a pecific impairment ollecti e impairment
Maturity analysis 30 June 2019 30 June 2018 Birr'000 Birr'000
urrent on current
oans and ad ances to customers net
82 Bunna International Bank Share Company Notes to the Financial Statements or the year ended une AUDITOR’S REPORT
15a Impairment allowance on loans and advances to customers
reconciliation of the allowance for impairment losses for loans and ad ances to customers by class is as follows:
Collective allowance for As at 30 June Charge for the As at 30 June impairment 2018(re-estated) year 2019 Birr'000 Birr'000 Birr'000
griculture Transportation loan anufacturing industry omestic trade and ser ices mport and export Building and construction taff oan
reconciliation of the allowance for impairment losses for loans and ad ances to customers by class is as follows une :
Specific allowance for As at 30 June Charge for the As at 30 June impairment 2017 year 2018 Birr'000 Birr'000 Birr'000 mport and xport Transportation loan omestic trade and ser ices
Collective allowance for As at 30 June Charge for the As at 30 June impairment 2017 year 2018 Birr'000 Birr'000 Birr'000
griculture Transportation loan anufacturing industry omestic trade and ser ices mport and export Building and construction ersonal non staff taff oan eal estate loan ealth otel Tourism
83 Bunna International Bank Share Company Notes to the Financial Statements Bunna or the International year ended Bank S.C. une
16 Investment securities
Fair Value Percentage 30 June 2019 Gain/loss 30 June 2019 shareholding Birr'000 Birr'000 Birr'000
At Cost At Fair Value Fair Value through other comprhensive income Bunna nsurance th witch bay ndustrail e elopment thiopian e nsurance
Fair Value 1 July 2018 30 June 2018 Gain/loss restated Percentage shareholding Birr'000 Birr'000 Birr'000
At Cost At Fair Value Fair Value through other comprhensive income(June 30,2018-AFS) Bunna nsurance th witch bay ndustrail e elopment thiopian e nsurance et change on uity n estment 5,984 16,681 22,664
The e uity in estment is measured at fair alue as of une The une alue is re estated as of uly as per intial application of at fair alue and the fair alue gain loss is reported as fair alue through other comprhensi e income The fair alue of n estment on bbay ndustrial e elopment is measured at cost since the compnay not yet operational n the other hand the fair alue of n estment on thiopian e nsurance for une is measured by sum up the additional in estment made in to the fair alue since the company has not able to pro ide its financial report for year ended une
Amortized Cost( June 30,2018-Loans and receivables): 30 June 2019 30 June 2018 Birr'000 Birr'000 B bills reat eniassance am Bond 16a Impairment allowance on NBE Bills & Bonds mpiarment oss llowance on B Bills Bonds
et B Bills Bonds
Total in estment securities
Maturity analysis of investment securities 30 June 2019 30 June 2018 Birr'000 Birr'000
urrent on current
s per intial application impairment loss allowance is computed for in estment on Bills and Bonds t intial application Birr was held and as une additional impairment loss of Birr is pro ided and the total impiarment loss allowance as of une is Birr
84 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT or the year ended une
30 June 2019 30 June 2018 Birr'000 Birr'000 17 Other financial assets and prepayments
Financial assets n cleared effects local and foreign ther recei ables
ess: mpairment pro ision et other financial asset
30 June 2019 30 June 2018 Birr'000 Birr'000 Non-financial assets and prepayments hares awaiting resale d ance for purchases of goods and ser ices ssets in stock tock of stationery and printing materials repaid rent repaid insurance repaid staff assets
Total other assets
Maturity analysis 30 June 2019 30 June 2018 Birr'000 Birr'000
urrent on current
17a Impairment allowance on other assets reconciliation of the allowance for impairment losses for other assets is as follows: 30 June 2019 30 June 2018 Birr'000 Birr'000 Balance at the beginning of the year intial ad ustment uly charge for the year
Balance at the end of the year
30 June 2019 30 June 2018 Birr'000 Birr'000 18 Non-current assets held for sale
Balance as at the beginning of the year epossessed collateral isposals during the period
Balance at the end of the year
Bunna nternational Bank took o er collateral of some customers and these were recorded in the books as ssets classified as held for sale as the Bank had no intention to make use of the property for administrati e use anagement initiated a plan to dispose of these assets to willing buyers and expects to ha e completed the transaction before the end of the next financial period
These assets ha e been alued by in house engineers responsible for collateral aluation using the market approach determined using e el inputs
There is no cumulati e income or expenses in relating to assets held for sale
85 Bunna International Bank Share Company Notes to the Financial Statements Bunna International Bank S.C. or the year ended une
30 June 2019 30 June 2018 19 Prepayment for leasehold land Birr'000 Birr'000 As at 1 July, ayments during the year mortisation for the year
As at 30 June
The bank ac uired a s uare meter of land through lease for years from ddis baba ity o ernment and e elopment and anagement Bureau Tenure dministration Transitional eriod er ice ro ect ffice on uly The total cost of the leasedhold land is Birr which shall be amorti ed o er sixty years The bank has paid Birr as down payment The remaining Birr will be paid o er years period starting from uly after a grace period of years with annual regular installment payment of Birr and accrued interest thereoff at interest rate per annum urther the bank has bought office Building at Bahir ar ity of which the contract has lease agreement for s uare meter at Birr per s uare meter The total cost of leasedland is Birr which shall be amorti ed o er forty years The bank has paid Birr and the remaining Birr will be paid o er years
Cost Amortisation Net book value Birr'000 Birr'000 Birr'000
20 Intangible assets
As at 1 July 2017 dditions amortisation As at 30 June 2018 dditions amortisation As at 30 June 2019
This includes the cost of core banking application software The bank s intangible asset has definite useful life o borrowing cost was capitalised during the year
86 AUDITOR’S REPORT Total Total Birr'000 - - 147,344 147,344 310,189 310,189 66,781 66,781 123,673 123,673 26,231 26,231 91,943 91,943 32,800 173,299 173,299 170,839 170,839 50,235 433,861 214,125 214,125 262,782 262,782 262,782 (1,070) (1,069) (1,578) (2,219) Under progress Birr'000 ------6,158 6,158 1,173 1,173 1,173 1,173 1,173 1,173 4,985 4,985 6,158 6,158 Motor vehicles vehicles Birr'000 - 73,294 73,294 52,798 31,435 14,254 14,254 8,015 8,015 24,357 24,357 24,357 18,666 6,760 104,729 104,729 64,479 29,459 77,156 77,156 77,156 45,813 45,813 (1,069) (1,886) (1,578) (937) Birr'000 Furniture and fittings and fittings - - - 50,314 50,314 34,645 34,645 12,590 12,590 21,152 21,152 41,665 41,665 5,501 28,886 28,886 10,213 10,213 11,215 11,215 15,670 15,670 15,670 40,101 40,101 62,817 62,817 4,455 (19) (88) Birr'000 Accessories Computer & Computer - - - 61,305 61,305 38,931 38,931 8,734 73,852 73,852 73,852 42,744 42,744 109,198 109,198 67 22,374 22,374 151,764 151,764 42,566 11,548 11,548 78,093 12,547 12,547 31,108 31,108 31,108 (181) (91) Birr'000 equipments Office and other and other Office - - - 12,047 12,047 86,941 20,808 20,808 39,479 39,479 6,282 6,282 58,503 60,287 60,287 60,287 33,714 28,438 7,653 48,240 48,240 14,526 26,718 26,718 (65) (23) Birr'000 Premises 21,370 82 82 21,453 21,453 21,453 21,453 As at 30 June 2018 30 at As 1 July at 2018 As June 2019 30 at As Accumulated depreciation: 1 July at 2017 As June 2018 30 at As 1 July at 2018 As June 2019 30 at As bookNet value Property, plant and equipment and plant Property, Cost: 1 July at 2017 As As at 1JulyAs 2017 Additions Disposals Reclassification Additions Disposals Reclassification year the for Charge Disposals year the for Charge Disposals JuneatAs 201830 JuneatAs 201930 Bunna International Bank Share Company Share Bank International Bunna Notes toFinancial the Statements Notes 2019 ended 30 June year the For 21
87 Bunna International Bank Share Company Notes to the Financial Statements ForBunna the International year ended Bank 30S.C. June 2019
30 June 2019 30 June 2018 22 Deposit from customers Birr'000 Birr'000
Demand deposits 2,369,625 2,231,392 Savings deposits 6,733,035 4,922,296 Special savings 1,210,740 908,363 Fixed time deposits 189,324 1,091,209
10,502,724 9,153,261
30 June 2019 30 June 2018 Maturity analysis Birr'000 Birr'000
Current 10,499,224 9,140,841 Non- current 3,500 12,420
10,502,724 9,153,261
30 June 2019 30 June 2018 23 Due to other banks Birr'000 Birr'000
Demand deposits 21,777 13,409 Savings deposits 7,643 10,715 Fixed time deposits 54,505 769,989
83,925 794,113
30 June 2019 30 June 2018 Maturity analysis Birr'000 Birr'000
Current 83,925 678,609 Non-current - 115,504
83,925 794,113
30 June 2019 30 June 2018 24 Borrowings Birr'000 Birr'000
Current Bank overdrafts - 24,715
- 24,715
This represents an amount drawn down out of the 6 months overdraft facility of Birr 25,000,000 obtained from a local bank, Zemen Bank on 14 June 2016 and renewable quarterly. The facility was matured and settled on 26 Septmber 2018. It was secured on the Banks NBE bill cretificate amounting to Birr 51,217,000.
The Bank had no long term borrowings at the reporting date.
68
88 Bunna International Bank Share Company Notes to the Financial Statements For the year ended 30 June 2019 AUDITOR’S REPORT
30 June 2019 30 June 2018 25 Other liabilities Birr'000 Birr'000 Financial liabilities Audit fee payable 248 255 Blocked Amounts 1,453 1,387 Accrued interest on Leasedhold land 4,427 Cashier's payment order (CPO) payable 125,040 130,707 Telegraphic Transfer (TT) payable 6,607 7,000 Board of directors' fee payable 1,560 1,200 Allocation for founders 2,172 5,389 Exchange payable to NBE 20,613 10,397 Dividend payable 33,844 34,091 Share holders service charge payable 5,481 5,494 Old drafts and payments outstanding 18,645 14,936 Impiarment Loss Allowance on LC & Guarntee 104 Credit Reference System (CRS) fund payable 102 136 Margins held in LCs and CAD 619,064 468,487 Other payables 171,969 161,557
1,011,329 841,036
30 June 2019 30 June 2018 Non-financial liabilities Birr'000 Birr'000
Unearned income 52,691 51,203 Employees' income tax payable 3,766 2,572 Accrued leave payable 25,900 18,457 5% tax on interest on deposits 1,556 1,533 Pension fund payable 2,225 1,504 Capital Gain Tax - 37 Stamp duty charge 1,036 411 Vat payable 36 39 Graduate tax payable 3 2 Witholding tax payable 57 349
87,270 76,107
Gross amount 1,098,599 917,143
30 June 2019 30 June 2018 Maturity analysis Birr'000 Birr'000
Current 1,098,599 917,143 Non-current -
1,098,599 917,143
26 Defined benefit obligations
The Bank operates an unfunded severance pay plan for its management staff who have served the Bank for 3 years and above and are below the retirement age (i.e. has not met the requirement to access the pension fund). The final pay-out is determined by reference to current benefit’s level (monthly salary) and number of years in service and is calculated as 1 month salary for the first year in employment plus 1/2 of monthly salary for each subsequent in employment to a maximum of 18 months final monthly salary.
69
89 Bunna International Bank Share Company Notes to the Financial Statements Bunna t e International e en e Bank S.C. ne
e e t e et i s f e ents n nts e nise in t e fin n i st te ents
30 June 2019 30 June 2018 Birr'000 Birr'000 A Liability recognised in the financial position
e e n e
30 June 2019 30 June 2018 B Amount recognised in the profit or loss Birr'000 Birr'000
ent se i e st nte est st
30 June 2019 30 June 2018 C Amount recognised in other comprehensive income: Birr'000 Birr'000 e e s e ent ss n e n i ss ti ns e e s e ent ss n e e ien e
e e ent in t e efine benefit b i ti n e t e e s is s f s 30 June 2019 30 June 2018 Birr'000 Birr'000 t t e be innin f t e e ent se i e st nte est st e e s e ent sses enefits i
t t e en f t e e
e si nifi nt t i ss ti ns e e s f s
i in n i ss ti n n te e e 30 June 2019 30 June 2018 is nt te n te s in e se
ii t it in e i e
e te f t it ss e f e ees e t se in t t e e i n e t e (“DHS”) e t e e t i es e n fe e t it tes f e e b n s f e t e in e t e tes e i e in e b n s t e te i e e b n e e ie s t e t it te f t e e in t e i e f e b n n inte te ine f tes in bet een t ese es
es e e e ss e t t t it i be in ine it t e ti te st n t f i n t it t b es b is e b t e t i iet f t f i (“ASSA”), sin e t e tes in t ese t b es e si i t t e fe e t it te t e
ese tes bine e i te s i e s f s
Age Mortality rate Male Female 0.31% 0.22% 0.30% 0.23% 0.36% 0.31% 0.41% 0.28% 0.52% 0.32% 0.45% 0.43% 0.63% 0.63% 0.98% 0.98% 1.54% 1.54%
90 Bunna International Bank Share Company Notes to the Financial Statements AUDITOR’S REPORT
) S
( )
Impact on defined benefit obligation 30 June 2019 D ( , ) , ( , ) ,
, ( )
30 June 2019 30 June 2018 27 Provisions Birr'000 Birr'000
, , , , ( , ) ( , )
, ,
30 June 2019 30 June 2018 28 Share capital Birr'000 Birr'000
Authorised , , , , , ,
Issued and fully paid , , , , , ,
Share premium , ,
A D S “Minimum Banks”, ,
S
91 Bunna International Bank Share Company Notes to the Financial Statements Bunna International a n Bank S.C. un
29 Earnings per share
a nin s s a is a u a i i in i a a i a a num ina s a s u s an in u in i 30 June 2019 30 June 2018 Birr'000 Birr'000
i a a , ,
i a a num ina s a s u s an in , , , ,
a nin s s a Bi
30 June 2019 30 June 2018 30 Retained earnings Birr'000 Birr'000
innin a , , i i n a , , as m im ia mn n inan ia ass s in ia a i a , , i s a n i , , ans a s , , ans m u a isk s , ,
n a , ,
30 June 2019 30 June 2018 31 Other comprehensive income Birr'000 Birr'000
innin a , m asu m n ain ss n i m n n i s i a i ns , , a i n m nsi in m , , ai a u s ui n s m n in ia a ai a u s ui n s m n i , n a , ,
30 June 2019 30 June 2018 32 Legal reserve Birr'000 Birr'000
innin a , , ans m i ss , ,
n a , ,
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33 Special reserve
ank s u i mana m n as s a is a s ia s un ma s
92 Bunna International Bank Share Company Notes to the Financial Statements a n un AUDITOR’S REPORT
30 June 2019 30 June 2018 Birr'000 Birr'000 34 Regulatory risk reserve
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an ss im ai m n min usin a i na Bank i ia B ui in s is ss an an ss im ai m n min usin i ss m un , i n is ans m u a isk s ain a nin n n n is i u a s i us nis M , a in B i i s in s in m n im ai ans a n is i u a s a s Bank, am un n a is ans u a isk s
30 June 2019 30 June 2018 35 Cash generated from operating activities Notes Birr'000 Birr'000
i a , ,
Adjustments for non-cash items: ia i n , an an ui m n , , m isa i n a m n as an , , m isa i n in an i ass s , , ain ss n is sa , an an ui m n m ai m n n ans an i a s , , m ai m n n ass s , m ia m n ss ns B Bi s B n s m ia m n ss ns inan ia u an m ia m n ss ns i m ia m n ss ns Bank si isi ns , , n m s a m n a n in n i i a i ns , , i n u n a ua i n ss ain , , in s in m , ,
Changes in working capital: as in as in ans an a an s us m s , , , , as in as in ass s , , as in as in n n u n ass sa , , n as as in si s m us m s , , , , n as as in u inan ia ins i u i ns , , n as as in ia i i i s , , , , n s a m n as s, i n sa , an an ui m n m is 30 June 2019 30 June 2018 Birr'000 Birr'000
s n is sa , , k a u , an an ui m n is s , ain ss n sa , an an ui m n
93 Bunna International Bank Share Company Notes to the Financial Statements BunnaFor Internationalthe year ended Bank S.C.30 June 2019
36 Related party transactions The Bank is owned by several diverse shareholders without ultimate parent company.
A number of transactions were entered into with related parties in the normal course of business. These are disclosed below: 30 June 2019 30 June 2018 Nature of relationship Birr'000 Birr'000 a Transactions with related parties
Loans to related parties - Loans to key management personnel Director/Excutive Management 9,051 7,311
b Key management compensation
Key management has been determined to be the members of the Board of Directors and the Executive Management of the Bank. The compensation paid or payable to key management is shown below. There were no sales or purchase of goods and services between the Bank and key management personnel as at 30 June 2019.
30 June 2019 30 June 2018 Birr'000 Birr'000 Salaries and other short-term employee benefits 4,467 3,747 Share of annual profit of Board of Directors 1,560 1,200 Sitting allowance of Board of Directors 1,056 576
7,083 5,523
37 Employees
The average number of persons employed by the Bank during the year and at the end of the year was as follows:
30 June 2019 30 June 2018 Number Number Executive Management 5 5 Management 262 208 Non-management 1,426 1,167
1,693 1,380 38 Contingent assets and liabilities a Contingent assets
The Bank has lodged legal charges to revers the judgment given by the Lower court(the suit raised from the rent contract with maximum amout of Birr 26,000.However no receivable has been recognised as the receipt of the amount is dependent on the final outcome of the court decision. b Contingent liabilities
Some of the Bank's customers have brought legal charges against the Bank in the process of carrying out its normal business operations. The maximum exposure of the Bank to these legal cases as at 30 June 2019 is Birr 17,066,274.51(as at June 30, 2018 was Nil and as of June 30,2017 was Birr 1,080,954). No provision has been made in the financial statements as the bank believe that it is not probable that the economic benefits would flow out of the Bank in respect of these legal actions.
74
94 Bunna International Bank Share Company Notes to the Financial Statements For the year ended 30 June 2019 AUDITOR’S REPORT
39 Guarantees and letters of credit
The Bank conducts business involving performance bonds and guarantees. These instruments are given as a security to support the performance of a customer to third parties. As the Bank will only be required to meet these obligations in the event of the customer's default, the cash requirements of these instruments are expected to be considerably below their nominal amounts.
The table below summarises the fair value amount of contingent liabilities for the account of customers:
30 June 2019 30 June 2018 Birr'000 Birr'000
Guarantees issued and outstanding 3,276,124 4,455,785 Commitment on letter of credit net of margin paid 641,089 360,339
3,917,213 4,816,124
As per IFRS-9 intial application, impairment loss allowance is computed for off balance sheet items( Letter of credit and financial guarantees). At intial application a total of Birr 193,123.18 (For LC Birr 18,373.18 and for financial guarantee Birr 174,750) was held and as June 30,2019 additional/reversal impairment loss of Birr 88,860.93 ( for LC additional 13,948.92 and for financial guarantee reversal of Birr 102,809.85)is provided and the total impiarment loss allowance as of June 30, 2019 is Birr 104,262.25.
40 Commitments
The Bank has commitments, not provided for in these financial statements as follows:
30 June 2019 30 June 2018 Birr'000 Birr'000
Undisbursed loan/unutilized revolving facilities 78,205 239,724 Unutilised overdraft 136,275 222,865
214,480 462,590
41 Operating lease(Rent) commitments - Bank as lessee
The Bank leases various properties under non-cancellable operating lease agreements. The lease terms are usually between two and five years, and majority of these lease agreements are renewable at the end of the each lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
30 June 2019 30 June 2018 Birr'000 Birr'000 No later than 1 year 50,658 38,209 Later than 1 year and no later than 5 years 135,394 101,355 Later than 5 years 24,505 32,142
Total 210,556 171,706
The Company has a land lease agreement. The folowing is the future agreegate minimum lease payments: 30 June 2019 30 June 2018 Birr'000 Birr'000 No later than 1 year 7,148 Later than 1 year and no later than 5 years 32,968 29,394 Later than 5 years 94,328 89,748
Total 134,444 119,142 The landleased agreement installment amount was at interest rate of 9.50% per annum at intial recognition. However, the intrest rate is raised to 11.50% at subsequent period.
42 Events after reporting period
In the opinion of the Directors, there were no significant post balance sheet events which could have a material effect on the state of affairs of the Bank as at 30 June 2019 and on the profit for the period ended on that date. However, the Bank acquired eight floor (B+G+8) head office building, located at Addis Ababa City Administration Bole-Subcity Woreda-02, as per the purchae contract agreement signed on October 7, 2019 at cost of Birr 285,000,000 (Birr two hundred eighty five million only).
75
95 Bunna International Bank S.C.
Bunna International Bank S.C (BIB) Branches’ Address
No. Branches City/ Town Telephone Fax CITY BRANCHES 1 Main Branch Addis Ababa 011-1-58-08-84 011-1-58 08 26 011-1-58 -08-65 011-1-58-08-24 2 Hayahulet Mazoria Branch Addis Ababa 011-6-61-30-69 011-6-61 30 68 011-6-62-21-28 3 Mesalemia Branch Addis Ababa 011-2-78-22-43 011-2-78-22 42 011-2-78-22-46 4 Bole-Medhanealem Branch Addis Ababa 011-6-62-24-47 011-6-62 24 45 011-6-62-24-42 011-6-62-24-43 5 Genet Branch Addis Ababa 011-5-52-90-10 011-5-52 90 11 011-5-53-69-49 6 Ayer-Tena Branch Addis Ababa 011-3-486500 011-3-48 77 20 011-3-48-71-25 011-3-48-73-95 7 Habtegiorgis Branch Addis Ababa 011-1-55-82-24 011-1-55 82 26 011-1-55-82-05 8 Asrasement Mazoria Branch Addis Ababa 011-2-80-07-48 011-2-80 07 49 011-2-80-07-86 011-2-80-07-97 9 Beklo-Bet Branch Addis Ababa 011-4-16 32 55 011-4- 16 32 56 011-4-16 35 41 011-4 -16 32 30 10 Merkato Branch Addis Ababa 011-2-78 14 35 011-278 17 42 011-2-78 02 23 11 Olympia Branch Addis Ababa 011-1-572119/57 011-1-572112
12 Kotebe Branch Addis Ababa 011-89 6 26 22 011-660 32 51 011-89 6 26 21 13 Gerji Branch Addis Ababa 011-6- 39 40 45 011-6-39 40 06 011-6-39 40 11 14 Gojjam Berenda Branch Addis Ababa 011-2-130307 011-2-130223
96 ANNUAL REPORT
No. Branches City/ Town Telephone Fax 15 Bole Rwanda Branch Addis Ababa 011-6-392088/13 011-6-392089 16 Bole Aserasement Branch Addis Ababa 011-6-631289 011-6-638589 17 Lideta Branch Addis Ababa 011-5-576260/09 011-5-576259 18 Sholla Gebeya Branch Addis Ababa 066-7-673648 066-7-673576 19 Imperial Branch Addis Ababa 066-7-376162 066-7-673793 20 Wollosefer Corporate Branch Addis Ababa 011-4-700468 011-4-700493 21 Summit Branch Addis Ababa 011-6-678493 011-6-678519 22 Millinium Branch Addis Ababa 011-6-672573 011-6-672592 23 Shala Menafesha Branch Addis Ababa 011-6-672773 011-6-672758 24 Kality Branch Addis Ababa 011-4-717231 011-4-717214 25 Bethel Branch Addis Ababa 011-3-493499 011-3-493348 26 Meskel Flower Branch Addis Ababa 011-4-702469 011-4-702494 27 Gulele Branch Addis Ababa 011-2-734238 011-2-734236 28 CMC Branch Addis Ababa 011-6-675705 011-6-675161 29 Kolfe Branch Addis Ababa 011-2-738733 011-2-738587 30 Addisu Gebeya Branch Addis Ababa 011-1-268268 011-1-268282 31 Kazanchise Branch Addis Ababa 011-5-571354 011-5-571360 32 Piazza Branch Addis Ababa 011-1-264083 011-1-264117 33 Kahen Sefer Branch Addis Ababa 011-5-586413 0115-586474 34 Megenagna Branch Addis Ababa 011-6-674416 011-6-674423
35 Mexico Branch Addis Ababa 0115-57-33-35 0115-57-33-26 36 Kebede Michael Branch Addis Ababa 0116-67-42-64 0116-67-45-01 37 Haile G/selassie Street Branch Addis Ababa 011-6-67-32-74 011-6-67-33-12 38 Lebu Branch Addis Ababa 011-4-71-31-85 011-4-71-31-09 39 Lafto Branch Addis Ababa 011-4-71-09-49 011-4-71-09-64 40 Gerji -Mebrat Hail Branch Addis Ababa 011-6-39-43-34 011-6-39-43-35 41 Jemo Branch Addis Ababa 011-4-71-32-13 011-4-71-32-16 42 Kotebe 02 Branch Addis Ababa 0116-39-81-43 011-6-53-88-58 0116-44-79-19 43 Goffa Branch Addis Ababa 011-4-70-38-36 011-4-70-54-35 44 Abinet Branch Addis Ababa 011-5-57-88-70 011-5-57-85-12 45 Ehel Berenda Branch Addis Ababa 011-2-29-10-44 011-2-29-13-79
97 Bunna International Bank S.C.
No. Branches City/ Town Telephone Fax 46 Sosit Kutir Mazoria Branch Addis Ababa 011-3-69-26-39 011-3-69-29-06 47 Nefas silk Branch Addis Ababa 011-4-70-82-93 0114-70-86-83 48 Wuha Limat Branch Addis Ababa 011-6-89-30-3 011-6-89-22-06 49 Torhailoch Branch Addis Ababa 011-3-84-20-35 0113-84-20-45 50 Atlas Branch Addis Ababa 011-6-67-22-94 011-6-67-34-72 51 Lancha Branch Addis Ababa 0114-70-16-78 011-4-70-21-35 52 Raguel Branch Addis Ababa 011-2-73-47-39 011-2-73-52-80 53 Goma Tera Branch Addis Ababa 011-2-31-60-20 011-2-31-61-10 54 Urael Branch Addis Ababa 011-5-57-80-13 55 Alem Bank Branch Addis Ababa 011-3-69-52-00 56 Lideta Dessie Hotel Area Addis Ababa 011-5-57-99-59 011-5-57-86-25 Branch 57 Bole Bulbula Branch Addis Ababa 011-4-71-40-26 011-4-71-40-70 58 Hanna Mariam Branch Addis Ababa 011-4-71-12-05 011-4-71-13-84 59 Summit-Safari Branch Addis Ababa 011-6-68-00-60 011-6-68-01-46 60 Ayat Branch Addis Ababa 011-6-39-14-82 61 Gullele Fenance Branch Addis Ababa 011-2-73-33-47 011-2-73-30-34 62 Asko Branch Addis Ababa 011-2-73-14-91 011-2-73-16-65 63 Signal Branch Addis Ababa 011-6-68-41-45 64 Kera Branch Addis Ababa 011-4-702566 011-4-702613 011-4-702264 65 Quas Meda Branch Addis Ababa 011-2-304001/04 66 Tekelehaimanot Branch Addis Ababa 011-2-73-58-12 011273-58-11 67 Meskel square Branch Addis Ababa 0115-57-46-78 68 Mekanisa Abo Branch Addis Ababa 0113-69-08-58 0113-69-26-65 69 Kechene Medhanialem Addis Ababa 0111-72-51-32 Branch 70 Selassie Branch Addis Ababa 011-1-72-52-36 71 Wessen Branch Addis Ababa 011-6-68-07-98 011-6-68-04-99 72 Yeka Abado Branch Addis Ababa 011-8-78-79-76 73 Dembel Area Branch Addis Ababa 011-5-57-16-72 74 Mehal Ehil Berenda Branch Addis Ababa 0112-73-53-15 0112-73-52-16 75 Arada Giorgis Branch Addis Ababa 011-126-70-53 011-1-26-71-49
98 ANNUAL REPORT
No. Branches City/ Town Telephone Fax 76 Tele Medhanealem Branch Addis Ababa 0116-50-68-68 011-6-50-63-14 77 Merab Merkato Branch Addis Ababa 011-2-73-36-07 0112-73-36-72 78 Kirkos Branch Addis Ababa 011-4-70-43-08 0114-70-64-14 79 Churchil Branch Addis Ababa 0115-58-31-71 011-558-18-61 80 Stadium Branch Addis Ababa 0115-58-31-71 011-558-18-61 81 Lafto Mebrat Hail Branch Addis Ababa 011-4-19-96-05 011-4-71-10-97 82 Ayeretena 05 Branch Addis Ababa 0113-69-40-28 ... 83 Saris Addis Sefer Branch Addis Ababa 0114-70-88-54 0114-70-98-54 84 Alemayehu Mekonnen Branch Addis Ababa 0115-57-48-52 0115-57-41-54 85 Beshale Branch Addis Ababa 0116 68- 37-58 0116 66-17-25 86 Sealite Mihret Branch Addis Ababa 011-6-73-36-76 011-6-73-36-09 87 Gurd Shola Branch Addis Ababa 0116-66-02-20 011-6-68-34-27 88 Mekanisa Branch Addis Ababa 0113-69-96-20 0113-69-88-97 89 Military tera Branch Addis Ababa 0112-73-55-71 0112-73-28-75 90 Dil Ber Branch Addis Ababa 0111-54-67-75 0111-54-64-91 91 Bole Flamingo Branch Addis Ababa 0115 57 53 38 0115 57 33 70 92 Africa Avenue Branch Addis Ababa 0115 58-29-43 0115 58-28-16 93 Meri loke Branch Addis Ababa 0116 73 34 78 0116 73-35-74 94 Kality Maseltegna Branch Addis Ababa 0114 62- 61- 64 .... 95 Africa Union Branch Addis Ababa 011 5 57-03-71 0115 57 03-70 96 Sefera Branch Addis Ababa 0114 71-11-37 0114 71-14-15 97 Kera Beg tera Branch Addis Ababa 0113 85-24-42 0113 85-20-27 98 CMC Michael branch Addis Ababa 0116 73-36-53 0116-73-36-51 99 Sebategna branch Addis Ababa 011-5-58-29-43 011-5 58-47-82
OUTLYING BRANCHES 100 Adama Branch Adama 022-1-12-16-00 022-1- 12 05 00 022-1-12 05 35 022- 1-12 20 70 101 Bahirdar Branch Bahir-Dar 058-2-22-22-00 058- 2- 22 22 40 058-2-22-20-60 102 Mekelle Branch Mekelle 034-4 -40 00 94 034-4-40 01 10 034-4 -40 00 93 103 Gondar Branch Gonder 058-1-11 24 43 058-1-11-24-73
99 Bunna International Bank S.C.
No. Branches City/ Town Telephone Fax 104 Bichena Branch Bichena 058-6 -65 15 15 058-6-65 15 16 058- 6 -65 15 17 058- 6 -65 10 53 105 Hossana Branch Hosanna 046-5-55 21 61 046-5-55 38 21 046-5-55 09 32 106 Kobo Branch Kobo 033-3-341274 033-334 12 75 033-3-34 12 78 107 Jimma Branch Jimma 047-1-12 20 85 047- 112 33 58 047-1-12 33 94 047-1-12 34 51 108 Gambella Branch Gambella 047-5-51 00 79 047-5-51 00 57 047-5-51 01 49 109 Shashemene Branch Shashemene 046-2-10 02 45 046-1-10 02 48 046-1-10 00 71 046- 1-10 01 17 110 Hawassa Branch Hawassa 046-2-20 55 85 046-2-20 79 40 046-2-21 48 97 046-2-20 40 73 111 Dessie Branch Dessie 033-1-12 01 72 033-1-12-00-90 033-1-12 01 88 033-1-12 00 50 112 Debire Birhan Branch Debire Birhan 011-6-81 12 44 011-6-81 13 64 113 Halaba Branch Halaba 046-5-56 06 43 046-5-56 06 29 046-5- 56 05 68 114 Bale Robe Branch Robe 022-6-65 28 00 022-6- 65 28 43 022-6-65 28 48 022- 6-65 24 13 115 Bale Goba Branch Goba 022-6-61 25 28 022-6-61 25 29 022-6-61 25 30 116 Kobo Robit Branch Kobo 033-1-130234 046-2-11 00 40 033-1-13 01 68 117 Shashemene Arada Branch Shashemene 0046-2-11 00 52 046-2-11 00 40 046-2-11 00 57 118 Yirgalem Branch Yirgalem 046-2-25 -17-49 046-2-25-07 59 046-2-25 12 95 119 BahirDar Belay Zeleke Branch Bahir Dar 058-2-200010 058-2-264171
100 ANNUAL REPORT
No. Branches City/ Town Telephone Fax 120 DebreMarkos Branch DebreMarkos 058-7-711645 058-7-71-14-59 121 Hawassa Tabor Branch Hawassa 046-2-120039 046-2-12-00-39 122 Moyale Branch Moyale 046-4-440335 046-4-440286 123 Dejen Branch Dejen 058-7-760019 058-7-760484 124 Mekele Enkodo Branch Mekelle 034-4-406750 034-4-40-67-55 125 Nekemte Branch Nekemt 057-6-611207 057-6-611289 126 Adama Dembella Branch Adama 022-1-100672 022-1-114181 022-1-127362 127 DireDawa Branch DireDawa 025-4-110115/42 025-4-110128 128 Harar Branch Harar 025-4-660032/85 025-4-660035 129 DolloMenna Branch DolloMenna 022-6-680025 022-6-680298 022-6-680169 130 Asossa Branch Asossa 057-7-750411 057-7-750413 057-7-750615 131 Gimbi Branch Gimbi 057-7-710457/95 057-7-710516 132 Angergutin Branch Angergutin 057-6-340191/14 057-6-340160 133 Woreta Branch Woreta 058-4-461155 058-4-461304 134 Togochale Branch Togochale 025-8-820112 025-8-820126 135 Woldiya Branch Woldiya 033-3-311105 033-3-311171 136 Korem Branch Korem 034-5-510156 034-5-510188 137 Wukro Branch Wukro 034-4-431132 034-4-431189 138 Merawi Branch Merawi 058-3-300473 058-3-300797 139 Bonga Branch Bonga 047-3-311193 047-3-310130 140 Jigjiga Branch Jigjiga 025-2-780000 025-2-780248 141 Sekota Branch Sekota 033-4-400009 033-4-400079 142 Alamata Branch Alamata 034-7-740071 034-7-740197 143 Adigrat Branch Adigrat 034-4-450342 034-4-450370 144 Bahir Dar Mehal Gebeya Bahir Dar 058-2-222103 058-2-201875 Branch 145 Welete Branch Welete 011-3-67-91-95 011-3-67-92-13 146 Bishoftu Branch Bishoftu 011-4-30-04-89 011-4-30-05-02 147 Arbaminch Branch Arbaminch 046-8-81-40-38 046-8-81-37-88 148 Castle Branch Mekele 034-2-41-53-48 0342-41-54-09
101 Bunna International Bank S.C.
No. Branches City/ Town Telephone Fax 149 Dessie Tossa Branch Dessie 033-3-12-01-07 033-3-12-01-07 150 Shire Branch Shire 034-2-44-01-97 034-2-44-02-36 151 Legetafo Branch Legetafo 011-6-67-92-54 011-667-92-44 152 Ashewa Meda Branch Ashewa Meda 011-2-60-18-89 011-2-60-14-83 153 Bahir Dar -Abay Mado Branch Bahir Dar 058-3-21-14-03 058-3-21-40-92 154 Humera Branch Humera 034-2-48-01-32 034-2-48-01-17 034-2-48-01-16 155 Metema Branch Metema 058-8-26-91-94 156 Alemgena Branch Alemgena 011-3-67-96-79 011-3-67-94-31 157 Debrework Branch Debrework 058-6-63-06-10 158 Adet Branch Adet 058-3-38-11-93 058-3-38-11-20 159 Gode Branch Gode 025-7-76-18-82 160 Adama Arada Branch Adama 022-2-11-48-23 022-2-11-38-69 161 Burayu Branch Burayu 011-2-60-48-54 162 Mota Branch Mota 058-6-61-19-96 058-6-61-20-55 163 Dire Dawa Sabian Branch Dire Dawa 025-4-11-09-89 025-4-11-49-64 164 Asela Branch Asela 022-2-38-34-12 022-2-38-08-69 165 Logia Branch Logia 033-5-50-08-62 033-5-50-14-84 166 Kombolcha Branch Kombolcha 033-3-51-15-16 033-3-51-38-22 167 Nejo Branch Nejo 057-7-74-12-83 168 Gambella New Land Branch Gambella 047-5-51-24-81 047-5-51-00-62 169 Bahir Dar Tana Branch Bahirdar 058-3-20-58-64 058-3-20-61-56 170 Shewa Robit Branch Shewa Robit 033-6-64-20-77 033-6-64-20-14 171 Atsbi Branch Atsbi 034-3-40-05-59 034-3-40-04-28 172 Gonder Fasil Branch Gonder 058-2-11-76-96 058-2-11-68-48 173 Gobye Branch Gobye 033-4-56-02-20 033-4-56-02-33 174 Axum Branch Axum 0342-75-77-17 034-275-96-55 175 Enticho Branch Enticho 034-4-49-11-22 034-4-49-12-00 176 Edaga Hamus Branch Edaga Hamus 034-7-73-07-02 034-7-73-07-04 177 Konso Karat Branch Karat 046-7-73-06-57 178 Wolaita Sodo Branch Wolaita 046-1-80-48-31 179 Wuchale Branch Wuchale 033-2-24-03-32 033-2-24-02-44
102 ANNUAL REPORT
No. Branches City/ Town Telephone Fax 180 Mersa Branch Mersa 083-3-33-11-60 0920-19-92-84 181 Angacha Branch Angacha 046-3-40-04-01 046-3-40-04-92 182 Ataye Branch Ataye 033-6-61-08-62 183 Amanuel Branch Amanuel Gojam 058-7-77-03-73 058-7-77-02-35 184 Bure Branch Bure 058-7-74-14-46 185 Fiche branch Fiche 011-1-60-97-13 186 Jimma-Abajifar Branch Jimma 047-2-21-82-80 187 Dembecha Branch Dembecha 058-7-73-07-89 188 Damboya Branch Damboya 0462-45-03-97 046-2-45-04-74 189 Debark Branch Debark 058-4-17-36-17 058-4-17-52-54 0912-89-24-02 190 Sululta Branch Sululta 0111-61-73-92 011-1-61-79-69 191 Maksegnit Branch Maksegnit 058-332-06-97 192 Hossana Gombora Branch Hossana 046-1-78-53-95 193 Gerba Branch Gerba 033-4-54-06-18 033-4-54-02-28 194 Dabat Branch Dabat 058-1-13-08-78 058-1-13-08-43 195 Wolkite Branch Wolkite 0113-65-96-72 0113-65-88-91 196 Debre Tabor Branch Debretabor 0581-41-54-07 058-141-06-54 197 Furi Branch Furi 0113-80-21-03 0113-80-22-26 198 Sebeta Branch Sebeta 0113-38-48-73 0113-38-43-74 199 Debre Epa Branch Debrebirhan 0116-37-54-02 0116-37-55-92 200 Momona Branch Mekele 0342-40-16-24 034-2-40-37-54 201 Holeta Branch Holeta 011-2-61-05-37 011-2- 61-07-65 202 Adi Shumdhun Branch Mekele 034 2 41-32-75 034 2 41-32-76 203 Gefersa Guje Branch Gefersa 0112 60-13-56 011 2 60-14-28 204 Finote Selam Branch Finoteselam 058-7-75-20-45 058-7-75-20-48 205 Injibara branch Injibara 058-2-27-16-85 058 2-27-16-89
103 Bunna International Bank S.C. Recieve Money Fast from all over the world with Bunna Bank's Money Transfer Services
ቡና ኢንተርናሽናል ባንክ አ.ማ. BUNNA INTERNATIONAL BANK S.C. (BIB)
104 ANNUAL REPORT Use our ATM and POS Machines Located at Convinient Places
በተለያዩ ቦታዎች በሚገኙ የክፍያ መፈፀሚያ ማሽኖቻችን (POS) ይገልገሉ፡፡
BUNNA INTERNATIONAL BANK S.C. (BIB)
105 Bunna International Bank S.C. Bunna Mobile & Internet Banking
“BUN” BUNNA INTERNATIONAL BANK INTEREST FREE BANKING SERVICE We are Your Partner in Providing Sharia Complaint Banking Service:
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