Annual Report 2016/17

ANNUAL REPORT 2016/17

YEAR ENDED 30 JUNE 2017

www.unitedbank.com.et FINANCIAL AND OPERATIONAL HIGHLIGHTS (in thousands of Birr)

20,000,000 17,684,016 18,000,000 14,000,000 16,000,000 11,996,311 13,601,736 12,000,000 14,000,000 11,804,363 10,000,000 12,000,000 8,534,359 9,402,459 10,000,000 8,000,000 6,860,084 8,063,475 8,000,000 6,000,000 4,710,762 5,069,624 6,000,000 4,000,000 4,000,000 2,000,000 2,000,000 - - 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17

Total Deposits Loans and Advances

25,000,000 3,000,000 21,902,918 2,515,640 2,500,000 20,000,000 17,269,873 2,072,489 2,000,000 14,360,872 1,686,240 15,000,000 1,575,272 1,557,577 11,876,369 1,500,000 9,985,997 1,201,148 1,251,894 10,000,000 974,748 1,000,000 898,276 600,000 5,000,000 500,000

- - 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17

Total Assets Paid up Capital Total Capital

4,000 3,431 205 3,500 3,213 200 2,921 3,000 161 2,424 2,500 150 127 2,100 2,000 94 100 73 1,500 ) 1,000 50 500 0 - 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17

No. of Branches No. of Employees FINANCIAL AND OPERATIONAL HIGHLIGHTS (in thousands of Birr) TABLE OF CONTENTS

20,000,000 17,684,016 BOARD CHAIRMAN’S MESSAGE 18,000,000 14,000,000 16,000,000 11,996,311 13,601,736 12,000,000 I. ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS 14,000,000 11,804,363 10,000,000 12,000,000 8,534,359 9,402,459 10,000,000 8,000,000 6,860,084 1. ECONOMIC OVERVIEW 8,063,475 8,000,000 6,000,000 4,710,762 5,069,624 6,000,000 4,000,000 2. CORPORATE GOVERNANCE 4,000,000 2,000,000 2,000,000 - - 3. OPERATIONAL PERFORMANCE SUMMARY 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17 Total Deposits Loans and Advances 4. FINANCIAL PERFORMANCE OVERVIEW

5. PROPOSAL ON DIVIDEND 25,000,000 3,000,000 21,902,918 2,515,640 2,500,000 II. BUSINESS DEVELOPMENT & ADMINISTRATIVE ISSUES 20,000,000 17,269,873 2,072,489 2,000,000 14,360,872 1,686,240 15,000,000 1,575,272 1,557,577 1. MARKET AND BRANCH EXPANSION 11,876,369 1,500,000 9,985,997 1,201,148 1,251,894 10,000,000 974,748 2. CORPORATE SOCIAL RESPONSIBILITY (CSR) 1,000,000 898,276 600,000 5,000,000 500,000 3. HUMAN RESOURCE DEVELOPMENT

- - 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17 4. MULTI-CHANNEL BANKING Total Assets Paid up Capital Total Capital 5. INTEREST FREE BANKING SERVICES

6. OTHER DEVELOPMENTS 4,000 3,431 205 3,500 3,213 200 2,921 III. AUDITORS’ REPORT & FINANCIAL STATEMENT 3,000 161 2,424 2,500 150 127 2,100 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2,000 94 100 73 1,500 ) STATEMENT OF FINANCIAL POSITION 1,000 50 500 STATEMENT OF CHANGES IN EQUITY 0 - 2012/13 2013/14 2014/15 2015/16 2016/17 2012/13 2013/14 2014/15 2015/16 2016/17 STATEMENT OF CASH FLOWS No. of Branches No. of Employees NOTES FORMING PART OF THE FINANCIAL STATEMENTS የ19ኛው የባለአክሲዮኖች ዓመታዊ ጠቅላላ ጉባኤ ጥሪ የሕብረት ባንክ አ.ማ. ባለአክሲዮኖች 19ኛ ዓመታዊ መደበኛ ጠቅላላ ስብሰባ ጥቅምት 16 ቀን 2010 ዓ.ም. ከጠዋቱ 3፡00 ሰዓት ጀምሮ በአዲስ አበባ ሒልተን ሆቴል ስለሚካሄድ ባለአክሲዮኖች ወይም ሕጋዊ ወኪሎቻቸው በተጠቀሰው ቀን፣ ሰዓትና ቦታ በስብሰባው ላይ እንዲገኙ የባንኩ የዲሬክተሮች ቦርድ ጥሪውን ያቀርባል፡፡

የስብሰባው አጀንዳ 1. የስብሰባውን አጀንዳ ማፅደቅ፣ 2. የዲሬክተሮች ቦርድ ሪፖርት ማድመጥ፣ መመርመርና ተወያይቶ ማጽደቅ፣ 3. የኦዲተሮችን ሪፖርት ማድመጥና የባንኩን

- የሀብትና ዕዳ ሚዛን እና - የትርፍና ኪሳራ መግለጫ ማድመጥና ተወያይቶ ማጽደቅ፣

4. የባንኩን ዓመታዊ የትርፍ ክፍፍል መወሰን፣ 5. የዲሬክተሮች የቦርድ አባላትን የአገልግሎት ክፍያ መወሰን፣ 6. የአክሲዮን ዝውውር ማጽደቅ፣ 7. በኢትዮጵያ ብሔራዊ ባንክ መመሪያ መሰረት ለ2018/2019 በጀት ዓመት የዲሬክተሮች ቦርድ አባላት አስመራጭ ኮሚቴ መምረጥ፣ ክፍያቸውን መወሰን እና የስራ መመሪያ ማጽደቅ 8. የስብሰባውን ቃለጉባኤ ማጽደቅ

ማሳሰቢያ፡- በስብሰባው ላይ ለመገኘት የማይችል ባለአክሲዮን ከስብሰባው ዕለት ቢያንስ ከሦስት ቀናት በፊት ባንኩ ያዘጋጀውን የውክልና መስጫ ሰነድ በባንኩ ዋና መ/ቤት (በቅሎ ቤት ሜክዎር ኘላዛ ሕንፃ 1ኛ ፎቅ የባንኩ አክሲዮን ክፍል) ድረስ ቀርቦ በመፈረም ሌላ ሰው ለመወከል ይችላል፡፡ ማንኛውም ባለአክሲዮን ለስብሰባው ሲመጣ ኢትዮጵያዊ ዜግነት ያለው መሆኑን የሚያሳይ የታደሰ መታወቂያ ዋናውንና አንድ ኮፒ ይዞ መምጣት ይኖርበታል፡፡ በውል አዋዋይ የተረጋገጠና በስብሰባው በመካፈል ድምፅ ለመስጠት ግልጽ ስልጣን የሚሰጥ የውክልና ማስረጃ የያዘ ተወካይ ውክልናውን ይዞ በመቅረብ በስብሰባው ለመሳተፍ ይችላል፡፡

የሕብረት ባንክ አ.ማ. የዲሬክተሮች ቦርድ

6 BOARD OF DIRECTORS የ19ኛው የባለአክሲዮኖች ዓመታዊ ጠቅላላ ጉባኤ ጥሪ የሕብረት ባንክ አ.ማ. ባለአክሲዮኖች 19ኛ ዓመታዊ መደበኛ ጠቅላላ ስብሰባ ጥቅምት 16 ቀን 2010 ዓ.ም. ከጠዋቱ 3፡00 ሰዓት ጀምሮ በአዲስ አበባ ሒልተን ሆቴል ስለሚካሄድ ባለአክሲዮኖች ወይም ሕጋዊ ወኪሎቻቸው በተጠቀሰው ቀን፣ ሰዓትና ቦታ በስብሰባው ላይ እንዲገኙ የባንኩ የዲሬክተሮች ቦርድ ጥሪውን ያቀርባል፡፡

- የሀብትና ዕዳ ሚዛን እና - የትርፍና ኪሳራ መግለጫ ማድመጥና ተወያይቶ ማጽደቅ፣ Ato Zafu Eyessuswork Zafu 4. የባንኩን ዓመታዊ የትርፍ ክፍፍል መወሰን፣ Chairman, Board of Director 5. የዲሬክተሮች የቦርድ አባላትን የአገልግሎት ክፍያ መወሰን፣ 6. የአክሲዮን ዝውውር ማጽደቅ፣ Ato Getamesay Degefu W/ro Azalech Yergu Vice Chairman Board of 7. በኢትዮጵያ ብሔራዊ ባንክ መመሪያ መሰረት ለ2018/2019 በጀት ዓመት Director የዲሬክተሮች ቦርድ አባላት አስመራጭ ኮሚቴ መምረጥ፣ ክፍያቸውን መወሰን Director እና የስራ መመሪያ ማጽደቅ 8. የስብሰባውን ቃለጉባኤ ማጽደቅ

ማሳሰቢያ፡- በስብሰባው ላይ ለመገኘት የማይችል ባለአክሲዮን ከስብሰባው ዕለት ቢያንስ ከሦስት ቀናት በፊት ባንኩ ያዘጋጀውን የውክልና መስጫ ሰነድ በባንኩ ዋና መ/ቤት (በቅሎ ቤት ሜክዎር ኘላዛ ሕንፃ 1ኛ ፎቅ የባንኩ አክሲዮን ክፍል) ድረስ ቀርቦ በመፈረም ሌላ ሰው ለመወከል ይችላል፡፡ ማንኛውም ባለአክሲዮን ለስብሰባው ሲመጣ ኢትዮጵያዊ ዜግነት ያለው መሆኑን Ato Wube Kinfe የሚያሳይ የታደሰ መታወቂያ ዋናውንና አንድ ኮፒ ይዞ መምጣት ይኖርበታል፡፡ Director በውል አዋዋይ የተረጋገጠና በስብሰባው በመካፈል ድምፅ ለመስጠት ግልጽ ስልጣን Ato Fikadu Girma Ato Wesenu Kumela Director Director የሚሰጥ የውክልና ማስረጃ የያዘ ተወካይ ውክልናውን ይዞ በመቅረብ በስብሰባው ለመሳተፍ ይችላል፡፡

የሕብረት ባንክ አ.ማ. የዲሬክተሮች ቦርድ

Ato Tsegaye Degefu Ato Efrem Hailemariam W/ro Getu Getahun Director Director Director 6 6 BOARD CHAIRMAN’S MESSAGE Despite the aforementioned negative backdrop, United Bank’s 2016/17 nancial year was marked by considerable improvements in terms of operational and nancial results. One of the key performance indicators in that regard was total deposits that recorded a signi cant increase of Birr 4.08 billion (30.01%) over that of last year to reach Birr 17.68 billion. As a result, the Bank’s deposit grew by 30.01% which is equivalent to the industry yearly growth. Total outstanding balance of loans and advances also stood at Birr 11.99 billion exhibiting an absolute increment of Birr 3.46 billion (40.56%) more than the previous year. While the 30.01% growth of total deposits was the same as the industry’s average that recorded for loans and advances (40.56%) was higher than the average for the industry. Despite the substantial increase in loans and advances extended to customers, the Bank’s corporate asset quality has been signi cantly strengthened during the period, witnessing laudable quality that could be regarded as industry standard. Needless to say, this is a result of our prudent risk management practice.

During the period under report, our Bank produced an operating gross pro t Birr 488.69 million before tax and after provisions which, though 1420% higher than that of It is my honour and pleasure to welcome you all, on the previous year was considered modest by industry behalf of the Board of Directors and on my own behalf, standards. to the NINETEENTH ANNUAL GENERAL MEETING of Shareholders of United Bank S.C. In line with our agenda of reaching out to more customers in their own localities, we have extended our The Report that I am presenting to you today contains reach and broadened our branch network by opening the Audited Financial Statements as well as the Report 37 full-edged and 7 sub-branches to reach a total of of the Directors on the business operations of the Bank 205 branches as of 30 June 2017. Moreover, during the for the nancial year ended 30 June 2017. period under report we continued to make progresses in the digital banking space simplifying our customers’ During the nancial year ended 30th June 2017, the banking experience via our multi-channel banking global economic environment was characterized by platforms. Our online banking channel "Hibir Online formidable constraints. This was manifested in the form Service" witnessed a 24% growth in terms of the of weak investment, policy uncertainty and diminishing number of users of last year while the number of world trade. customers using the Bank's other self-service channels, Card and Mobile Banking, also recorded a growth of The challenges that faced our Bank’s performance 42% and 54%, respectively over that of the previous during the rst quarter of the nancial year included the year. Accordingly, transactions worth Birr 851 million sustained acute shortage of foreign currency due to were made via the Bank’s ATM & PoS channels, diminishing world trade exacerbated by the unrest in exhibiting a respectable increase of 15.8% over that of some areas of the country negatively impacting its the previous year. export earnings.

6 While staying focused on improving our present Both the Board and Management are in agreement that nancial performance, we also continued to strive to to remain a serious player in the banking sector in the capitalize on future growth opportunities by developing face of an ever changing business environment, there is new relationships with several corporate clients availing need for urgent transformation of our Bank not only by to such clients more ecient payment processing way of optimization of our operations but also by services by leveraging digital technology. One such rethinking our business model. To this end, we have initiative has been our Bank’s collaborative partnership already covered considerable ground in our with Ethiopian Airlines, a partnership that created and negotiations with external consultants to help us continues to create value for our mutual customers by develop the necessary strategy and business model that enabling them eect payments for their online would place our Bank rmly on a path to sustainable bookings using the Bank’s online platform as well as growth as well as its re-invention to achieve its initial over the counter via all its branch oces across the dream of being the “Preferred Bank”. country. On behalf of the Board of Directors and on my own Needless to say, such initiatives do take resources to behalf, I wish to recognize and appreciate the spirit of develop and deploy and may not be long before other collaboration and dedication displayed by both competitors get on the bandwagon. However, such Management and sta of the Bank throughout the year. being the state of modern competition, our Bank will But perhaps the Bank’s esteemed customers deserve the always strive to be ahead of the game considering the most praise for the trust they continued to repose in our relative digital technology edge our Bank has had and Bank. The Shareholders deserve our sincere thanks for continues to enjoy. they took the initial risk when they invested their resources to establish United Bank S.C. nearly twenty During the period covered by this report, the years ago and continue to do so to this day. They remain construction of the Bank’s headquarters progressed the true entrepreneur-champions. signi cantly such that better than eight oors of the concrete structure were completed. The construction Last but not least, I wish to thank my colleagues on the work is still continuing at a rapid pace. Board for their courage and perseverance in the discharge of their formidable duties and responsibilities Although our Bank performed better in certain respects in a trading environment fraught with considerable (mobilization of deposits and loans and advances constraints and uncertainties. granted) in the nancial year being reported up on, its pro tability performance as measured by earnings per share left a lot to be desired. Among other factors, a) the Thank you. Bank’s engagement in the construction of its landmark Headquarters building; b) its visibly rapid network expansion; and, c) the signi cantly low foreign exchange transactions during the period, accounted for what may be considered a lackluster performance in Zafu Eyessuswork Zafu that respect. Chairman, Board of Director

7 SENIOR MANAGEMENT

Ato Taye Dibekulu President

Ato Girum Tsegaye V/P - Operations

Ato Melaku Kebede V/P - Systems & E-banking Ato Berhanu H/Meskel Executive Assistant to Ato Bizuneh Tariku the President V/P Admin. & Finance

Ato Amare Gashaw AVP Domestic Banking & Ato Amha Tadesse Resource Mobilization Manager IT Infrastructure and W/ro Tsigereda Tesfaye Card Payment Operations Dept. AVP - Credit Management

Ato Sisay Molla Ato Tarekegn Assefa W/ro Hirut Adamu Manager Finance & Manager Marketing & Corporate Manager Human Resource Accounts Dept. Planning Dept. Management Dept. SENIOR MANAGEMENT

Ato Taye Dibekulu President

Ato Yetnayet Awugechew Ato Degol Gossaye Manager Risk Management & Manager Credit Analysis & Compliance Dept. Appraisal Dept. Ato Girum Tsegaye V/P - Operations W/ro Genet Asfaw Manager Credit Portfolio Management Dept.

Ato Asrat Arega Ato Ewnetu Ayalew Manager Trade Finance Dept . Manager Property and Ato Melaku Kebede Services Management Dept. V/P - Systems & E-banking Ato Berhanu H/Meskel Executive Assistant to Ato Bizuneh Tariku the President V/P Admin. & Finance Ato Dereje Kebede Manager City Branches Operation & Coordination Dept.

Ato Solomon Belete Ato Girma Tilaye Manager Legal Service Dept . Manager Engineering Dept .

Ato Amare Gashaw AVP Domestic Banking & Ato Amha Tadesse Resource Mobilization Manager IT Infrastructure and W/ro Tsigereda Tesfaye Card Payment Operations Dept. AVP - Credit Management Ato Nahom Abayu A/Controller

Ato Elias Gebru Ato Nebiyat Assefa Manager Outlying Branches Manager IT Systems & Operation & Coordination Dept. E-banking Dept .

Ato Sisay Molla Ato Tarekegn Assefa W/ro Hirut Adamu Manager Finance & Manager Marketing & Corporate Manager Human Resource Accounts Dept. Planning Dept. Management Dept. CORPORATE PHILOSOPHY Vision

The vision of United Bank is to be "The Preferred Bank" in the banking industry of Ethiopia.

Mission

Our mission is to render eﬃcient commercial banking products and employing state-of-the-art technology along with enhancing the value of its shareholders and well being of its employees.

Value statement

UB is ﬁrmly grounded with a corporate philosophy that incorporates

The customer is United Bank's lifeline. United Bank invests in its employees and digniﬁes them.

United Bank works towards proﬁtability and growth. United Bank values Honesty, Integrity and Loyalty.

10 REPORT OF THE BOARD OF DIRECTORS I. ANALYSIS OF RESULTS OF 2. CORPORATE GOVERNANCE OPERATIONS AND FINANCIAL CONDITIONS: The Corporate Governance structure of United Bank is designed to ensure the independence of the Board and 1. ECONOMIC OVERVIEW its ability to eectively supervise the operation of the Many years of weak global recovery since 2009 were bank by the management. The Board of Directors with followed by the lowest rate of growth in 2016. its four standing sub-committees is responsible for According to OECD Economic Outlook report, signs of supervising the management of the Bank’s business and improvement began to appear in June 2017. aairs with a view to enhancing long-term shareholders’ value. The four standing sub-committees of the Board The stronger policy-driven demand growth projected are for 2017-2018 in China and many other Asian economies helped to underpin the modest global turnaround. 1. Finance and Risk Review Committee, However, according to the OECD Economic Outlook 2. Audit Committee, report, the upturn could not be sustained inde nitely. 3. Business Development Committee and 4. Loan Review Committee that deal with the In the US, the economy remained on track to expand at various business aairs of the Bank. a faster rate. Growth in the euro area was on the upswing but remained below longer-term averages. The President of the Bank oversees the day to day Global oil price had been showing a mild upward trend management of the Bank. Under him there are three following an agreement among major producers to trim vice presidents responsible for Operations, Systems & supply. E-banking and Administration & Finance as well as two assistant vice presidents and 15 department managers. Domestically, the country experienced unprecedented uprising which resulted in stalled economic activities during the rst quarter of the scal year 2016/17. This 3. OPERATIONAL PERFORANCE situation was reversed shortly following the state of emergency decree by the government and economic SUMMARY activities began to regain momentum.

Competition for resources continued to aggravate and 3.1. Deposit Mobilization Despite the sti competition for resources in the foreign currency shortage also continued to be the banking industry, United Bank managed to register an major phenomenon in the banking industry. Ethiopia impressive improvement in its deposits level faces a growing trade de cit with total imports steadily year-on-year. Total deposits of the Bank reached Birr increasing while Export remains stagnant. According to 17.68 billion as at 30 June 2017 registering a remarkable the Ethiopian Revenues and Customs Authority, increase of Birr 4.08 billion (30.01%) compared to the Ethiopia's Export Earnings during the scal year 2016/17 balance of Birr 13.60 billion registered as at 30 June stood at USD 2.83 billion against last year’s same period 2016. The number of depositors of the Bank has also gure of USD 2.84 billion. On the other hand, import been showing a notable growth from time to time during the same period stood at USD 7.4 billion. 15.7 Billion. implying the strong con dence the public vested on the Bank. The Ethiopian economy on the whole experienced a

relatively stable macroeconomic environment during the Fiscal Year 2016/17with a single digit ination rate for much of the period. According to the data obtained from the Central Statistics Agency the Ination rate for the month of June 2017 was 8.8%.

11 Chart 1: Deposits by Type (in thousands of Birr)

10,000.000

8,000.000

6,000.000

4,000.000

2,000.000

Demand Savings Time 30-Jun-17 30-Jun-16

Closer look at the composition of deposits shows that Saving deposits accounted for the lion’s share (55.86%), followed by Demand and Time deposits which accounted for 25.47 % and 18.67%, respectively Chart 2: Breakdown of Deposits

Time 18.67%

Savings 55.86% Demand 25.47%

12 3.2. Loans and Advances United bank has extended Loans and Advances to The total outstanding balance of loans and advances customers engaged in various business and investment extended to customers as at 30 June 2017 stood at Birr activities. Loans and Advances balance of the Bank also 11.99 billion, re ecting an increase of Birr 3.46 billion registered a commendable increment year-on-year. (40.56%) compared with the previous year. Chart 1: Deposits by Type (in thousands of Birr) Moreover, the Bank has been able to maintain a healthy loan portfolio as a result of its prudent loan management practice.

10,000.000

8,000.000 Chart 3: Loans and Advances by Economic Sector (in thousands of Birr) 6,000.000 3,000.000 4,000.000

2,000.000 2,500.000

2,000.000 30 Jun 17 Demand Savings Time 30 Jun 16 1,500.000 30-Jun-17 30-Jun-16 1,000.000

500.000 Closer look at the composition of deposits shows that Saving deposits accounted for the lion’s share (55.86%), followed by Demand and Time deposits which accounted for 25.47 % and 18.67%, respectively Building Domestic trade Export Import Manufacturing Others Personal Transport Construction and service Production Chart 2: Breakdown of Deposits *Others include Hotel and Tourism, Loans under Litigation, Interest Free Financing, Advance against Import Bills and Health Service and Merchandise Loan.

Looking at sectoral distributions, the Export sector accounted for the lion’s share (21.02%) of the total loans and Time advances portfolio, followed by Domestic Trade and Services (16.60%) and Import (16.42%). 18.67% Chart 4: Breakdowns of Loans and Advances

Building Construction Savings Domestic trade and service 55.86% Demand Export 25.47% Import Manufacturing Production Others Personal Transport

12 13 3.3. International Banking Activities 4. FINANCIAL PERFORMANCE With the intent of boosting its foreign currency earn- OVERVIEW ings, United bank has been facilitating import and export businesses through its trade nance wing giving 4.1. Assets a special emphasis to exporters. Total assets of the Bank registered a commendable increment during the Fiscal Year 2016/17. The total In order to gain access to the global nancial system, assets of the Bank stood at Birr 21.90 billion as at 30 June United Bank maintains correspondent relationships 2017, showing a substantial growth of Birr 4.63 billion with the following 7 (seven) banks: (26.82%) over last year same period balance of Birr 17.27 billion. • COMMERZBANK AG, • CITI BANK-NEW YORK, • STANDARD CHARTERED BANK, • UNICREDITO ITALIANO, 4.2. Capital • BANK OF AFRICA MER ROUGE-DJIBOUTI, Total capital of the Bank reached Birr 2.52 billion at the • BANK OF BEIRUT, UK LIMITED and end of June 2017. The balance exceeded last year same • BANK OF BEIRUT S.A.L, LEBANON. period figure of Birr 2.07 billion by Birr 443.15 million (21.38%). United also has both Unilateral and Bilateral key Exchange arrangements with more than 230 banks in Of the total capital, paid-up capital accounted for the the United States, Europe, Middle East, Asia and Africa. lion’s share with 61.9% (Birr 1.56 billion), followed by Legal Reserve and Retained Earnings which constituted During the period the Bank has continued to make 25.98% (Birr 653.53 million) and 11.4% (Birr 286.32 eorts to add more partners to its already respectable million), respectively. Paid-up capital showed an panel of prominent international money transfer com- increment of Birr 305.68 million (24.42%) over last year panies. Consequently, the number of such partner com- same period balance. panies had reached ten (10) as at 30 June 2017. These were Western Union, Money Gram, Xpress Money, Ria, KAAH, Lari Exchange, Dahabshiil, TRANSFAST, Bole 4.3. Income Atlantic International Money Service and Upesi Money Transfer Ltd. The plan in the future is for the effort exert- As at 30 June 2017, United Bank recorded a total income ed in this regard to continue unremittingly. of Birr 2.01 billion. The figure exceeded last year same period balance of Birr 1.67 billion by Birr 336.98 million Income from international banking services accounted (20.13%). for substantial share of the total income of the Bank. United Bank generated Birr 317.37 million from these line of banking services during the period under review. This accounts for 15.78% of the total income of the Bank.

14 3.3. International Banking Activities 4. FINANCIAL PERFORMANCE Chart 5: Income by Category (in thousands of Birr) With the intent of boosting its foreign currency earn- OVERVIEW ings, United bank has been facilitating import and export businesses through its trade nance wing giving 4.1. Assets 1,600.000 a special emphasis to exporters. Total assets of the Bank registered a commendable increment during the Fiscal Year 2016/17. The total 1,400.000 In order to gain access to the global nancial system, assets of the Bank stood at Birr 21.90 billion as at 30 June 1,200.000 United Bank maintains correspondent relationships 2017, showing a substantial growth of Birr 4.63 billion with the following 7 (seven) banks: (26.82%) over last year same period balance of Birr 17.27 1,000.000 30 - Jun - 17 billion. • COMMERZBANK AG, 900.000 • CITI BANK-NEW YORK, 30 - Jun - 16 • STANDARD CHARTERED BANK, 600.000 • UNICREDITO ITALIANO, 4.2. Capital 400.000 • BANK OF AFRICA MER ROUGE-DJIBOUTI, Total capital of the Bank reached Birr 2.52 billion at the 200.000 • BANK OF BEIRUT, UK LIMITED and end of June 2017. The balance exceeded last year same • BANK OF BEIRUT S.A.L, LEBANON. period figure of Birr 2.07 billion by Birr 443.15 million (21.38%). United also has both Unilateral and Bilateral key Exchange arrangements with more than 230 banks in Of the total capital, paid-up capital accounted for the the United States, Europe, Middle East, Asia and Africa. lion’s share with 61.9% (Birr 1.56 billion), followed by Interest Fees and Gains on Other Income Legal Reserve and Retained Earnings which constituted Income Commission Foreign During the period the Bank has continued to make 25.98% (Birr 653.53 million) and 11.4% (Birr 286.32 eorts to add more partners to its already respectable Income Exchange million), respectively. Paid-up capital showed an Dealings panel of prominent international money transfer com- increment of Birr 305.68 million (24.42%) over last year panies. Consequently, the number of such partner com- same period balance. panies had reached ten (10) as at 30 June 2017. These Closer analysis of composition of total income reveals that Interest Income accounted for the lion’s share were Western Union, Money Gram, Xpress Money, Ria, (77.04%) of the total income of the Bank; whereas Fees & Commission Income and Gain on Foreign Exchange KAAH, Lari Exchange, Dahabshiil, TRANSFAST, Bole 4.3. Income Dealings accounted for 16.54% and 5.19% of the total income, respectively. Atlantic International Money Service and Upesi Money As at 30 June 2017, United Bank recorded a total income Transfer Ltd. The plan in the future is for the effort exert- Chart 6: Breakdown of Income ed in this regard to continue unremittingly. of Birr 2.01 billion. The figure exceeded last year same period balance of Birr 1.67 billion by Birr 336.98 million Income from international banking services accounted (20.13%). for substantial share of the total income of the Bank. United Bank generated Birr 317.37 million from these line of banking services during the period under review. This accounts for 15.78% of the total income of the Bank. Interest Income

Fees and Commission income

Gains on Foreign Exchange Dealings

Others Income

14 15 4.4. Expenses

Total Operating Expenses of the Bank stood at Birr 1.52 billion as at 30 June 2017. The amount was Birr 276.82 million (22.23%) higher than that of the previous year balance. Chart 7: Expenses by Category (in thousands of Birr)

900,000

800,000

700,000

600,000

500,000 30-Jun-17

400,000 30-Jun-16

300,000

200,000

100,000

0 Interest Expense Operating Expenses Impairment Losses on Loans and Advances

With regards to composition of expenses, Operating Expenses took the lion’s share (55.84 %), while Interest Expense and Impairment Losses on Loans & Advances accounted for 41.70% and 2.46%, respectively.

Chart 8: Breakdown of Expenses

Interest Expense Operating Expenses Impairment Losses on Loans and Advances

16 4.4. Expenses 4.5. Proﬁt & Loss Account

Total Operating Expenses of the Bank stood at Birr 1.52 billion as at 30 June 2017. The amount was United Bank registered an all-time high Gross Pro t before tax but after provisions of Birr 488.69 million Birr 276.82 million (22.23%) higher than that of the previous year balance. as at 30 June 2017. The amount represented an increment of Birr 60.15 million (14.04%) over last year same period achievement. Chart 7: Expenses by Category (in thousands of Birr) Chart 9: Gross Proﬁt (in thousands of Birr )

2,500,000 900,000

800,000 2,000,000 700,000

600,000 1,500,000 30-Jun-17 500,000 30-Jun-17 30-Jun-16 400,000 30-Jun-16 1,000,000 300,000 200,000 500,000 100,000

0 Interest Expense Operating Expenses Impairment Losses Total Income Total Expenses Gross Pro t on Loans and Advances 5. PROPOSAL ON DIVIDEND With regards to composition of expenses, Operating Expenses took the lion’s share (55.84 %), while Interest Expense and Impairment Losses on Loans & Advances accounted for 41.70% and 2.46%, respectively. On the basis of the foregoing results, the Board of Directors recommends declaration of a pro rata dividend of 21.6% on fully paid shares for the year ended 30 June 2017. Chart 8: Breakdown of Expenses Atse Zerayakob, Meda Agame and D'Afrique have II. BUSINESS DEVELOPMENT & become operational during FY 2016/17. In addition, 7 ADMINISTRATIVE ISSUE sub branches, namely Azezo, Hayahulet, Semera Dry Port, Gerji Terminal, Yoseph, Kuch, and Bole Medhanialem have been opened during the same 1. MARKET AND BRANCH period. A concerted eort has been made to open the EXPANSION additional branches during period under review. The task of expanding branch network had been Interest Expense Meanwhile, the Bank has been exerting a multifaceted pursued vigorously. The total number of branches of the eort during 2016/17 scal year to undertake other Operating Expenses Bank including sub-branches reached 205 as at June 30, business development activities. In connection with 2017. Thirty seven additional branches, namely Gotera, Impairment Losses on Loans this, the Bank has spent Birr 6.2 million for Metahara, Jemo, Signal, Negelle Borena, Arise Negelle, and Advances advertisement and promotion during the period under Kobo, Mickey Leland Condominium, Arategna Akaba- review. bi-Harar, Bambis, Enderasie, Merkato Military Tera, Shindi, Wolkite, Sagure, Felege Hiwot, Gish Abay, Ayat Mall, Bonga, A ncho Ber, Figa Beshale, Sheger, Adihaki, Adwa, Lamberet, Metu, Lebu Ertu, Cinema Ras, Humera, Akaki Gara Duba, Meneharia Hawassa, Jackros, Halaba Ber Shashemene, Shiraro,

16 17 2. CORPORATE SOCIAL 4. MULTI-CHANNEL BANKING RESPONSIBILITY (CSR) ATM and POS United Bank lives its value of being a responsible The number of ATMs and POS live as at June 30, 2017 corporate citizen committed to having a positive impact reached 69 and 212, respectively. During the just ended in the societies and communities in which it operates. nancial year, a total of Birr 851 million was transacted During the scal year 2016/17 United Bank contributed via such channels which was an impressive increase of more than Birr 1.35 million towards promoting and 15.75% compared with last year same period gure of assisting humanitarian agendas including several 735 million transactions. Meanwhile, United Bank community projects and professional associations. acquires Visa, MasterCard and China Union Pay (CUP) international cards through its merchant outlets.

3. HUMAN RESOURCE DEVELOPMENT DEBIT CARDS The total human resource of the Bank reached 3,431 An outstanding performance was recorded by the bank (405 managerial, 1,874 clerical and 1,152 non - clerical) in terms of debit card issued during the period under as at June 30, 2017, showing an increase of 218 review. Debit cards that were personalized during the employees, compared to the total number of 3,213 Fiscal year 2016/17 registered a commendable increase employees reported on June 30, 2016. Concerning of 42% as compared to the performance of the previous academic quali cation, 114 (3.3%) of the employees are year. second degree holders, 1,478 (43.1%) are post-graduate diploma and rst degree holders; and 891 (26%) are advanced diploma and diploma holders. The rest INTERNET BANKING thereof (27.6%) comprise Certi cates, Grade 12 and A signi cant number of customers were bene ciaries of below. Looking at Gender composition, 1,994 (58.1%) the Bank’s World Class Internet Banking Service. The sta members are male, while the remaining 1,437 result achieved in this regard as compared with the (41.9%) are female. performance registered last year showed an encouraging increase of 24%. During the period, large As part of the Bank’s ongoing development program to amount of fund transfers were made by customers using empower and upgrade sta capacity, various technical the Bank’s Internet Services both to own and other bank and employee development training programs were accounts showing an impressive increase year-on-year. organized and conducted by the Bank and in collaboration with other training institutions. During the scal year that ended June 30, 2017, the Bank organized training programs on 50 dierent training titles and a HIBIR- MOBILE BANKING (*811#) total of 2,000 employees had participated which Meanwhile, a total of 37,784 customers were registered accounted for 58.3% of the overall sta. Of these for the Mobile Banking Service during the year under employees, 17 had taken training abroad while the report, showing a 54% increase compared to the remaining 1,983 were given training locally. customers registered during 2015/16 nancial year. A

total of 26,601 transactions amounting to Birr 124.6 With regard to continuing education program, 27 million fund transfers were made by customers using additional sta members have pursued their studies in this service. Besides, during the same period, about dierent disciplines and programs in the period under 264,329 customers received real time mobile alert SMS review. The total number of stas enrolled in higher messages for deposits and/or withdrawals made institutions has become 315. In connection with this, 48 to/from their respective accounts. sta members have successfully completed their studies during the year that ended June 30, 2017.

18 2. CORPORATE SOCIAL 4. MULTI-CHANNEL BANKING RESPONSIBILITY (CSR) ATM and POS United Bank lives its value of being a responsible The number of ATMs and POS live as at June 30, 2017 AGENT BANKING SERVICES (*885#) 6. OTHER DEVELOPMENTS corporate citizen committed to having a positive impact reached 69 and 212, respectively. During the just ended The number of registered agents that provide agent The construction of Head Quarters building of the Bank in the societies and communities in which it operates. nancial year, a total of Birr 851 million was transacted banking service reached 244 at the end of June 2017 is underway at an encouraging rate. It was on the 8th During the scal year 2016/17 United Bank contributed via such channels which was an impressive increase of showing an increase of 2.1% compared with last year’s oor level and roughly forty percent of the work de ned more than Birr 1.35 million towards promoting and 15.75% compared with last year same period gure of number of agents working with the bank during the in the contract was executed as at 30 June 2017. The assisting humanitarian agendas including several 735 million transactions. Meanwhile, United Bank same period. Management of the Bank is working closely with the community projects and professional associations. acquires Visa, MasterCard and China Union Pay (CUP) Company and the Consultant to have the building international cards through its merchant outlets. The number of active Wallet Accounts reached 8,803 completed according to the schedule agreed in the and the total balance in wallet accounts was Birr 951,606 contract. at the end of June 2017. A total of 44,835 transactions 3. HUMAN RESOURCE with an aggregate value of Birr 5.9 million were The global banking ecosystem has undergone DEVELOPMENT DEBIT CARDS undertaken through agent banking services during the unprecedented changes in recent years. It has scal year 2016/17. Both the number and value of compelled banks to reposition themselves within the The total human resource of the Bank reached 3,431 An outstanding performance was recorded by the bank transaction have shown signi cant improvement changing environment and to revisit existing business (405 managerial, 1,874 clerical and 1,152 non - clerical) in terms of debit card issued during the period under compared with the same period of the last scal year models. This implies that banks need to revise their as at June 30, 2017, showing an increase of 218 review. Debit cards that were personalized during the performance. business strategies in order to stay aoat in an employees, compared to the total number of 3,213 Fiscal year 2016/17 registered a commendable increase increasingly competitive market. To this end, United employees reported on June 30, 2016. Concerning of 42% as compared to the performance of the previous Bank is making an endeavor to help the bank overhaul academic quali cation, 114 (3.3%) of the employees are 5. INTEREST FREE BANKING year. its business model and adopt standards consistent with second degree holders, 1,478 (43.1%) are post-graduate In the scal year 2016/17, the total deposit mobilized the changing global banking businesses by redesigning diploma and rst degree holders; and 891 (26%) are through interest free banking reached Birr 346.9 million, its management strategy which include formulation of a advanced diploma and diploma holders. The rest INTERNET BANKING which was up by Birr 127.1 million (57.85%) compared to strategic road map, strategic and operational plans as thereof (27.6%) comprise Certi cates, Grade 12 and A signi cant number of customers were bene ciaries of the previous year similar period results. Similarly, well as organizational structure for the bank. below. Looking at Gender composition, 1,994 (58.1%) the Bank’s World Class Internet Banking Service. The Interest Free Financing (Murabah Financing) of Birr 88.2 sta members are male, while the remaining 1,437 result achieved in this regard as compared with the million was made available to customers during the (41.9%) are female. performance registered last year showed an same period. This was higher than the balance encouraging increase of 24%. During the period, large registered at the end of June 2016 by Birr 62.8 million. As part of the Bank’s ongoing development program to amount of fund transfers were made by customers using empower and upgrade sta capacity, various technical the Bank’s Internet Services both to own and other bank and employee development training programs were accounts showing an impressive increase year-on-year. organized and conducted by the Bank and in collaboration with other training institutions. During the scal year that ended June 30, 2017, the Bank organized training programs on 50 dierent training titles and a HIBIR- MOBILE BANKING (*811#) total of 2,000 employees had participated which Meanwhile, a total of 37,784 customers were registered accounted for 58.3% of the overall sta. Of these for the Mobile Banking Service during the year under employees, 17 had taken training abroad while the report, showing a 54% increase compared to the remaining 1,983 were given training locally. customers registered during 2015/16 nancial year. A total of 26,601 transactions amounting to Birr 124.6 With regard to continuing education program, 27 million fund transfers were made by customers using additional sta members have pursued their studies in this service. Besides, during the same period, about dierent disciplines and programs in the period under 264,329 customers received real time mobile alert SMS review. The total number of stas enrolled in higher messages for deposits and/or withdrawals made institutions has become 315. In connection with this, 48 to/from their respective accounts. sta members have successfully completed their studies during the year that ended June 30, 2017.

18 19 PHOTO GALLERY Projects Financed by United Bank S.C.

Hotel Project

Food Processing Plant

Manufacturing Floriculture

www.unitedbank.com.et PHOTO GALLERY Projects Financed by United Bank S.C.

Hotel Project

The 18th Annual General Meeting of Shareholders

Food Processing Plant

Manufacturing Floriculture

20 Partial depiction of the Bank’s 2016/17 21 Exporters Day www.unitedbank.com.et Participants of the 2016/17 Annual Management Meeting at Adama town

Depiction of Participants and Awardees in Inter-Branch Competition held at the 2016/17 Annual Management Meeting

22 Construction of United Bank’s HQ under Progress

Participants of the 2016/17 Annual Management Meeting at Adama town

Depiction of Participants and Awardees in Inter-Branch Competition held at the 2016/17 Annual Management Meeting

22 Partial Depiction of the Bank’s Annual Staff Day 23 Sharia Advisor’s Attestation report on UB’s Interest Free Banking (IFB) Window services

As one of the deliverables dictated on our IFB Consultancy Service Agreement, I hereby provide this attestation report for the consumption of all concerned stakeholders.

I have reviewed the principles and the contracts relating to the IFB (Interest Free Banking) transactions and applications introduced by United Bank up to the end of June 2017. The NBE directive number SBB/51/2011, which allowed the introduction of IFB services in Ethiopia, emphasized that IF Banking is required to follow Islamic Finance Principles. I have, therefore, conducted my review to form an independent opinion as to whether United Bank S.C. has complied with Islamic nance (Sharia based) rules and principles in providing IFB services.

The United Bank management is responsible for ensuring that the bank conducts it’s IF banking business in accordance with Islamic Finance (Sharia based) rules and principles. It is my responsibility to form an independent opinion, based on my review of the IFB operations of the bank.

My review included examining each type of transaction, the relevant documentation, systems and procedures adopted by United Bank. I have made my review so as to acquire all the information and explanations which are considered necessary to obtain sucient evidence to provide reasonable assurance that the IFB operation of United Bank has not violated Islamic Sharia rules and principles.

Therefore, in my opinion

1. The contracts, procedures and formats used by United Bank that I have reviewed are in compliance with the Islamic Sharia rules and principles. The documents reviewed and certi ed during the reporting period are a. Contract of Qard loan (general) b. Contract of pre-shipment Qard loan 2. It has been con rmed that United Bank’s transactions related to IFB Window services are separately recorded from its other operations. The nancial statements reported by management which is enclosed with this attestation report fairly represent the sources and uses of funds related to the IFB operations of the bank for the year ended June 30, 2017.

With regards,

Ibrahim Dawd,

IFB Consultant/Sharia Advisor/ 24 UNITED BANK SHARE COMPANY ST ATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME -IFB

FOR THE YEAR ENDED 30 JUNE 2017 2016 Birr Income from Murabah Financing 9,742,649 1,194,092 Fees and commission income 380,930 46,561 ______OPERATING INCOME 10,123,580 1,240,653 Awarness creation Workshop & Advisory fee (480,056) (722,389) Training & Education - - Stationary & Printing (311,752) (124,050) Depreciation (428,120) (570,827) Salaries & Benefits (172,671) (154,574) ______PROFIT /(LOSS) FROM INTEREST FREE 8,730,981 (331,186) B ANKING OPERATION UNITED BANK SHARE COMPANY STATEMENT OF FINANCIAL POSITION AINTES ATR ES30 TJ UFNREEE 2017 BANKING OPERATION

A SSETS Cash 260,837,315 189,780,758 Property and equipment - Net 1,284,360 1,712,480 Murabah Profit Recevables 19,195,373 5,466,625 Murabah Financing 88,208,928 25,450,712 Other Assets 6,420,501 1,233,268 Fund allocated for IFB operation 100,000,000 100,000,000 TOTAL ASSETS 475,946,476 323,643,843 LIA BILITIES Current - Private Al Wadiah 59,346,414 46,652,473 Current - Associations Al Wadiah 2,555,838 1,804,526 Current - Corporate Al Wadiah 1,052,190 1,467,610 Saving- Private Al Wadiah 283,007,759 169,413,637 Saving - Associations Al Wadiah 133,891 56,711 Saving - Corporate Al Wadiah 778,860 422,726 Total Deposit 346,874,951 219,817,683 Unearned Murabah profit 19,195,373 5,466,625 Margin Held - 370,470 Other Liablity 3,110,193 - Charity Payable 45,914 - TOTAL LIABILITIES 369,226,431 225,654,778 C APITAL ACCOUNT Alloc ated share Capital 100,000,000 100,000,000 Profit and loss from IFB operation 6,720,045 (2,010,935) TOTAL LIABILITIES & CAPITAL ACCOUNTS 475,946,476 323,643,843

25 AUDITORS’ REPORT & FINANCIAL STATEMENTS

BANK DIRECTORS

Bank require the Directors Bank Bank The Directors require to ens Bank Bank Bank.

Directors Accounting Bank requirement Bank s Directors necessary

Directors

Accounting Bank stat requirement Commercial Bank Directors Bank Directors

Directors Bank

Zafu Eyessuswork Zafu Taye Dibekulu Chairman, Board of Directors President

26 A.W. Thomas L.P. Chartered Certi ed Accountants AUDITORS’ REPORT (Authorized Auditors - የተፈቀደላቸው ኦዲተሮች)

& INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF UNITED BANK SHARE COMPANY

Opinion FINANCIAL STATEMENTS We have audited the financial statements of United Bank Share Company, set out on pages 18 to 60 which comprise the statement of financial position as at 30 June 2017, and the statement of BANK profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other DIRECTORS explanatory notes.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as at 30 June 2017, and its financial performance and its cash flows for the year then ended in accordance with the Accounting framework applied by the Bank and the Bank require the requirements of Commercial Code of Ethiopia, 1960 and the Banking Business Proclamation No. Directors 592/2008. Bank Bank The Directors require to ens Bank Basis for Opinion Bank Bank. 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 Directors Auditof the Financial statements section of our report. We are independent of the Bank in Accounting Bank accordance with the ethical requirements that are relevant to our audit of the financial statements, requirement Bank and we have fulfilled our other ethical responsibilities in accordance with these requirements. We s Directors necessary believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Directors Responsibilities of Directors for the Financial Statements

Accounting Bank stat requirement Directors are responsible for the preparation and fair presentation of the financial statements in Commercial Bank Directors accordance with the Accounting framework applied by the Bank and the requirements of the Bank Commercial Code of Ethiopia, 1960 and the Banking Business Proclamation No. 592/2008, and Directors for such internal control as Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. s. In preparing the financial statements, Directors are responsible for assessing the Bank’s ability to Directors Bank continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless shareholders either intend to liquidate the Bank or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report Zafu Eyessuswork Zafu Taye Dibekulu that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee Chairman, Board of Directors President that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from 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.

26 27 Report on Other Legal Requirements

As required by the commercial code of Ethiopia, based on our audit we report as follows: i) Pursuant to Article 375(1) of the commercial Code of Ethiopia, 1960 and based on our reviews of the board of Directors’ report, we have not noted any matter that we may wish to bring to your attention. ii) Pursuant to article 375 (2) of the commercial code of Ethiopia, we recommend the approval of the financial statements.

A.W. Thomas L.P. Addis Ababa Chartered Certified Accountants 25 September 2017

28 UNITED BANK SHARE COMPANY Report on Other Legal Requirements STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017 As required by the commercial code of Ethiopia, based on our audit we report as follows: Currency: Ethiopian Birr i) Pursuant to Article 375(1) of the commercial Code of Ethiopia, 1960 and based on our reviews of the board of Directors’ report, we have not noted any matter that we may wish to bring to your attention. Notes 2016 ii) Pursuant to article 375 (2) of the commercial code of Ethiopia, we recommend the approval of INTEREST INCOME 4 1,549,032,808 1,226,179,216 the financial statements. INTEREST EXPENSE 5 (634,780,008) (526,005,567)

NET INTEREST INCOME 914,252,800 700,173,649

A.W. Thomas L.P. Addis Ababa OPERATING INCOME Chartered Certified Accountants 25 September 2017 Fees and commission income 6 332,609,979 308,878,985 Net gains on foreign exchange dealings 7 104,349,452 118,041,330 Other income 8 24,799,370 20,716,383 1,376,011,601 1,147,810,347

Operating expenses 9 (849,908,539) (692,154,724) Impairment losses on loans and advances 16 (37,403,788) (27,110,712)

PROFIT BEFORE TAXATION 488,699,274 428,544,911 TAXATION CHARGE 10 (106,983,965) (89,529,603)

PROFIT FOR THE YEAR BEFORE COMPREHENSIVEINCOME 381,715,309 339,015,308

OTHER COMPREHENSIVE INCOME ______- - PROFIT FOR THE YEAR AFTER COMPREHENSIVEINCOME 381,715,309 339,015,308

EARNINGS PER SHARE (OF EACH ETB 100) 11 27.17 32.44

28 29 UNITED BANK SHARE COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Currency: Ethiopian Birr

Notes 2016 ASSETS Cash and balances with National Bank of Ethiopia and other Banks 12 3,186,500,580 2,918,710,179 Government securities 13 4,837,305,000 4,357,683,000 Loans and advances to customers 14 11,847,923,285 8,423,375,110 Investment in equity shares 17 91,627,000 91,627,000 Other assets 18 1,208,654,326 990,107,023 Properties held for sale 19 29,320,361 15,233,194 Property and equipment 20 693,044,239 463,791,455 Leasehold land 21 8,542,817 9,346,001

TOTAL ASSETS 21,902,917,609 17,269,872,962

LIABILITIES

Customer deposits 22 16,505,124,988 13,037,642,186 Due to financial institutions 23 1,178,891,214 564,093,554 Other liabilities 24 1,026,612,481 853,073,285 Payable on leasehold land 25 6,571,407 7,009,502 Margins held on letters of credit 26 563,093,620 646,035,501 Tax payable 11(c) 106,983,965 89,529,603

TOTAL LIABILITIES 19,387,277,675 15,197,383,631

SHAREHOLDERS’ FUNDS Share capital 27 1,557,577,452 1,251,893,646 Share premium 18,214,777 8,236,054 Retained earnings 286,320,728 254,261,481 Legal reserve 28 653,526,977 558,098,150

TOTAL SHAREHOLDERS’ FUNDS 2,515,639,934 2,072,489,331

TOTAL LIABILITIES AND SHAREHOLDERS’ FUNDS 21,902,917,609 17,269,872,962

The financial statements on pages 29 to 70 were approved and authorised for issue by the board of Directors on 25 September 2017 and were signed on its behalf by:

______Zafu Eyessuswork Zafu Taye Dibekulu Chairman,Board of Directors President

30 UNITED BANK SHARE COMPANY STATEMENT OF FINANCIAL POSITION UNITED BANK SHARE COMPANY AS AT 30 JUNE 2017 Currency: Ethiopian Birr STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 Notes 2016 ASSETS Currency: Ethiopian Birr Cash and balances with National Bank of Ethiopia and other Banks 12 3,186,500,580 2,918,710,179 Share Share Legal Retained capital premium reserve earnings Total Government securities 13 4,837,305,000 4,357,683,000 Loans and advances to customers 14 11,847,923,285 8,423,375,110 At 1 July 2015 974,748,216 27,157,646 473,344,324 210,989,485 1,686,239,671 Investment in equity shares 17 91,627,000 91,627,000 Other assets 18 1,208,654,326 990,107,023 Issue of shares 277,145,430 6,333,559 - - 283,478,989 Properties held for sale 19 29,320,361 15,233,194 Profit for the year 2016 - - - 339,015,308 339,015,308 Property and equipment 20 693,044,239 463,791,455 Leasehold land 21 8,542,817 9,346,001 Transfer to legal reserve - - 84,753,826 (84,753,826) - Dividends declared - 2015 - (25,255,151) - (210,989,486) (236,244,637) TOTAL ASSETS 21,902,917,609 17,269,872,962 At 30 June 2016 1,251,893,646 8,236,054 558,098,150 254,261,481 2,072,489,331 LIABILITIES

Customer deposits 22 16,505,124,988 13,037,642,186 Due to financial institutions 23 1,178,891,214 564,093,554 Other liabilities 24 1,026,612,481 853,073,285 Share Share Legal Retained Payable on leasehold land 25 6,571,407 7,009,502 capital premium reserve earnings Total Margins held on letters of credit 26 563,093,620 646,035,501 At 1 July 2016 1,251,893,646 8,236,054 558,098,150 254,261,481 2,072,489,331 Tax payable 11(c) 106,983,965 89,529,603 Issue of shares 305,683,806 17,812,117 - - 323,495,923 TOTAL LIABILITIES 19,387,277,675 15,197,383,631 Profit for the year 2017 - - - 381,715,309 381,715,309 SHAREHOLDERS’ FUNDS Share capital 27 1,557,577,452 1,251,893,646 Transfer to legal reserve - - 95,428,827 (95,428,827) - Share premium 18,214,777 8,236,054 Retained earnings 286,320,728 254,261,481 Legal reserve 28 653,526,977 558,098,150 Dividends declared - 2016 - (7,833,394) - (254,227,235)_ (262,060,629)_ At 30 June 2017 1,557,577,452 18,214,777 653,526,977 286,320,728 2,515,639,934 TOTAL SHAREHOLDERS’ FUNDS 2,515,639,934 2,072,489,331

TOTAL LIABILITIES AND SHAREHOLDERS’ FUNDS 21,902,917,609 17,269,872,962

The financial statements on pages 29 to 70 were approved and authorised for issue by the board of Directors on 25 September 2017 and were signed on its behalf by:

______Zafu Eyessuswork Zafu Taye Dibekulu Chairman,Board of Directors President

30 31 UNITED BANK SHARE COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

Currency: Ethiopian Birr

Notes 2016

Cash flows from operating activities Cashgenerated from operating activities 29(a) 608,074,826 427,146,800 Tax paid 11(c) (89,529,603) (76,919,097) Net cash (used in)/ generated from operating activities 518,545,222 (282,431,896)

Cash flows from investing activities Purchase of property and equipment 20 (299,275,108) (204,498,273) Proceeds from disposal of equipment 1,601,252 1,850,289 Proceeds from sale of properties held for sale (14,087,167) 12,549,886 Purchase of equity shares - (11,632,000) Net cash used in investing activities (311,752,023) (201,730,098)

Cash flow from financing activities Proceeds from issue of shares 323,495,926 283,478,989 Dividends paid (262,060,629) (236,244,637) Lease obligation paid (438,093) (438,093) Net cash (used in)/ generated from financing activities 60,997,202 (170,789,475)

Increase in cash and cash equivalents 267,790,401 195,293,864 Cash and cash equivalents at the beginning of the year 2,918,710,179 3,384,336,219 Cash and cash equivalents at the end of the year 29(b) 3,186,500,580 2,918,710,179

32 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017 1 REPORTING ENTITY

Currency: Ethiopian Birr United Bank Share Company was established in Addis Ababa in 1998 and registered as a share company in accordance with the provisions of the Licensing and Supervision of Banking Business Proclamation and the Commercial Code of Ethiopia of 1960. Notes 2016 The Bank’s principal activity is commercial Banking.

Cash flows from operating activities The registered address of the Bank is Addis Ababa, Ethiopia and it has branches Cashgenerated from operating activities 29(a) 608,074,826 427,146,800 throughout the country. Tax paid 11(c) (89,529,603) (76,919,097) Net cash (used in)/ generated from operating 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES activities 518,545,222 (282,431,896) Basis of preparation Cash flows from investing activities Purchase of property and equipment 20 (299,275,108) (204,498,273) The financial statements have been prepared on the historical cost basis of accounting. Proceeds from disposal of equipment 1,601,252 1,850,289 Proceeds from sale of properties held for sale (14,087,167) 12,549,886 Interest income and expense Purchase of equity shares - (11,632,000) Net cash used in investing activities (311,752,023) (201,730,098) Interest income and expense for all interest bearing financial instruments are recognised within profit or loss on the accrual basis using the effective interest method. The effective Cash flow from financing activities interest rate is the rate that exactly discounts the estimated future cash payments and Proceeds from issue of shares 323,495,926 283,478,989 receipts through the expected life of the financial instruments (or, where appropriate, a Dividends paid (262,060,629) (236,244,637) shorter period) to the carrying amount of the financial instruments. The effective interest Lease obligation paid (438,093) (438,093) rate is established on initial recognition of the financial asset and liability and is not Net cash (used in)/ generated from financing revised subsequently. activities 60,997,202 (170,789,475) The calculation of the effective interest rate includes all fees and commissions paid or Increase in cash and cash equivalents 267,790,401 195,293,864 received transaction costs, and discounts or premiums that are an integral part of the Cash and cash equivalents at the beginning of effective interest rate. Transaction costs are incremental costs that are directly attributable the year 2,918,710,179 3,384,336,219 to the acquisition, issue or disposal of a financial asset or liability. When a loan account Cash and cash equivalents at the end of the year 29(b) 3,186,500,580 2,918,710,179 becomes non-performing, interest is suspended until it is realised. Interest income includes interest on loans and advances, placements with other Banks and investments in government securities, and is recognized in the period in which it is earned.

Fees and commission income

In the normal course of business, the Bank earns fees and commission income from a diverse range of services to its customers. Fees and commission income and expenses that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate.

32 33 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fees and commission income, including account servicing fees,letters of credit opening fees, syndication fees among other service fees and commissions are recognised as the related services are performed. When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised on a straight-line basis over the commitment period.

Other fees and commission expense relate mainly to transaction and service fees, which are expensed as the services are received.

Property and equipment

Property and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation

Depreciation is calculated on the straight-line basis for buildings and on the written down value for other assets. The annual depreciation rates generally in use are:

Buildings 5% Motor vehicles 20% Computer hardware and software 25% Other office equipment 20% Furnitureand fittings 20%

Properties held for sale

Properties held for sale is immovable properties acquired through a foreclosure and available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets. They are stated at the lower of the carrying amounts and at their fair value less cost to sell.

34 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fees and commission income, including account servicing fees,letters of credit opening fees, syndication fees among other service fees and commissions are recognised as the related services are performed. When a loan commitment is not expected to result in the draw-down Impairment of non-financial assets of a loan, loan commitment fees are recognised on a straight-line basis over the commitment period. At the end of each reporting period, the Bank reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. Other fees and commission expense relate mainly to transaction and service fees, which are If any such indication exists, the recoverable amount of the asset is estimated and an expensed as the services are received. impairment loss is recognized in profit or loss whenever the carrying amount of the asset exceeds its recoverable amount. Previously recognised impairment losses may be reversed Property and equipment to the extent of the assets carrying amount.

Property and equipment is stated at cost less accumulated depreciation and any accumulated Foreign currencies impairment losses. i) Functional and presentation currency Depreciation The financial statements of the Bank are measured using the currency of the primary Depreciation is calculated on the straight-line basis for buildings and on the written down economic environment in which it operates (the “functional currency”). The financial value for other assets. The annual depreciation rates generally in use are: statements are presented in Ethiopian Birr(Birr), which is the Bank’s functional and presentation currency. Buildings 5% Motor vehicles 20% ii) Transactions and balances Computer hardware and software 25% Other office equipment 20% Foreign currency transactions that are denominated, or that require settlement, in a Furnitureand fittings 20% foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that Properties held for sale date. Non-monetary items carried at fair value that are denominated in foreign currencies are Properties held for sale is immovable properties acquired through a foreclosure and retranslated at the rates prevailing at the date when fair value was determined. Non- available for immediate sale in its present condition subject only to terms that are usual and monetary items that are measured in terms of historical cost in a foreign currency are customary for sales of such assets. They are stated at the lower of the carrying amounts and not retranslated. at their fair value less cost to sell. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised through profit or loss.

34 35 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

Financial instruments

A financial asset or liability is recognised when the Bank becomes party to the contractual provisions of the instrument.

Financial assets

a) Classification and measurement

The Bank classifies its financial assets into the following categories: loans, advances and receivables and held-to- maturity investments. Management determines the appropriate classification of its financial instruments at initial recognition, depending on the purpose and intention for which the financial instrument was acquired and their characteristics.

i) Loans, advancesand receivables

These are due from Banks, loans and advances to customersand arenon–derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and advances are recognised when cash is advanced to borrowers.

After initial recognition, these amounts are subsequently measured at amortised cost using the effective interest rates, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. The amortisation is included in profit and loss. The losses arising from impairment are recognised in profit or loss.

ii) Held-to-maturity financial assets

Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Bank has the positive intention and ability to hold to maturity.

UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Held-to-maturity financial assets are initially recognised at fair value including direct and incremental transaction costs and measured subsequently at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate and recognised in the profit or loss.

b) Derecognition of financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when:

The rights to receive cash flows from the asset have expired. The Bank has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass–through’ arrangement; and either: o The Bank has transferred substantially all the risks and rewards of the asset, or o The Bank has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Bank has transferred its rights to receive cash flows from an asset or has entered into a pass–through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Bank’s continuing involvement in the asset. In that case, the Bank also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Bank has retained.

Continuing 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 required to repay.

37 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c) Impairment and un-collectability of financial assets

The Bank assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a ‘loss’ event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Bank uses to determine that there is objective evidence of an impairment loss include:

The National Bank of Ethiopia directive on asset classification and provisioning Delinquency in contractual payments of principal and interest; Cash flow difficulties experienced by the borrower (for example, equity ratio, net income percentage of sales); Breach of loan covenants or conditions; Initiation of Bankruptcy proceedings; Deterioration of the borrower’s competitive position; Deterioration in the value of collateral; and Downgrading below investment grade level.

If it is probable that the Bank will not be able to collect all amounts due (principal and interest) according to the contractual terms of loans, receivables, or held-to- maturity investments carried at amortised cost, an impairment or bad debt loss has occurred. The amount of the loss is the difference between the asset's carrying amount and the present value of expected future cash flows discounted at the financial instrument's original effective interest rate (recoverable amount). The carrying amount of the asset is reduced to its estimated recoverable amount through use of the provision for bad and doubtful debts account. The amount of the loss incurred is included in profit or loss for the period.

i) Renegotiated /restructured loans

Where possible, the Bank seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated any impairment is measured using the original effective interest rate as calculated before the modification of terms and the loan is no longer considered past due. Management continually reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to an individual or collective impairment assessment, calculated using the loan’s original effective interest rate.

UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ii) Impairment losses on loans and advances

Loans and advances are shown at the gross amount adjusted for any provision for impairment losses. A provision for loan impairment is established if there is objective evidence that the Bank will not be able to collect all amounts due according to the original contractual terms of the loan. The amount of the provision is the difference between the carrying amount and the estimated recoverable amount.

In addition, a general provision is made against losses which are likely to be present in any loans and advances portfolio. The Bank follows the National Bank of Ethiopia Supervision of Banking Business Directive Number SBB 43/2008 Asset Classification and Provisioning (4th Replacement) in determining the extent of general provisions for impairment losses. The Directive classifies loans and advances as follows.

Provision Classification Percentage (i) Pass loans - Loans and advances that are fully protected by the current financial and paying capacity of the borrower and are not subject to criticism. In general, loans and advances which are fully secured, both as to principal and interest, by cash or cash substitutes, are classified under this category regardless of past due status or other adverse credit factors. 1 % (ii) Special mention - Any loan or advance past due 30 or more days, but less than 90 days. 3% (iii) Substandard - Non-performing loans or advances past due 90 or more days but less than 180 days. 20% (iv) Doubtful - Non- performing loans or advances past due 180 or more days but less than 360 days. 50% (v) Loss - Non-performing loans or advances past due 360 days. 100%

The provision percentage is applied on the carrying amount of the loans for pass and special mention categories and on the net loan balances for the other loan categories.

39 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The net loan balance is the outstanding balance less the net recovery value of the collateral.

When a loan is deemed uncollectable, it is written off against the related provision for impairment. Subsequent recoveries are credited to the provision for loan impairment in the income statement.

Government securities

Investment in Government securities are held to maturity and are carried at amortised cost.

Investment in equity shares

Investment in equity shares are carried at cost less any accumulated impairment losses.

Investment in associates

An associate is an entity over which the Bank has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates is incorporated in these financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Bank's share of the profit or loss and other comprehensive income of the associate.

Financial liabilities and equity instruments issued by the Bank

a) Classification and measurement

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Bank are recorded at the proceeds received, net of direct issue costs.

40 UNITED BANK SHARE COMPANY UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The net loan balance is the outstanding balance less the net recovery value of the Financial liabilities collateral. Financial liabilities are classified as either financial liabilities at fair value through When a loan is deemed uncollectable, it is written off against the related provision for profit or loss or other financial liabilities. impairment. Subsequent recoveries are credited to the provision for loan impairment in the income statement. Other financial liabilities

Government securities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Investment in Government securities are held to maturity and are carried at amortised cost. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Investment in equity shares The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The Investment in equity shares are carried at cost less any accumulated impairment losses. effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter Investment in associates period, to the net carrying amount on initial recognition.

An associate is an entity over which the Bank has significant influence. Significant Financial guarantee contracts influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and Financial guarantee contracts are contracts that require the issuer to make specified liabilities of associates is incorporated in these financial statements using the equity payments to reimburse the holder for a loss it incurs because a specified debtor fails method of accounting. Under the equity method, an investment in an associate is initially to make payments when due, in accordance with the terms of a debt instrument. Such recognised in the consolidated statement of financial position at cost and adjusted financial guarantees are given to Banks, financial institutions and other bodies on thereafter to recognise the Bank's share of the profit or loss and other comprehensive behalf of customers to secure loans, overdrafts and other Banking facilities. income of the associate. Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. Financial liabilities and equity instruments issued by the Bank The fair value of a financial guarantee at the time of signature is zero because all a) Classification and measurement guarantees are agreed on arm’s length terms and the value of the premium agreed corresponds to the value of the guarantee obligation. No receivable for the future Debt and equity instruments are classified as either financial liabilities or as equity in premiums is recognised. Subsequent to initial recognition, the Bank’s liabilities under accordance with the substance of the contractual arrangement. such guarantees are measured at the higher of the initial amount, less amortisation of fees recognised, and the best estimate of the amount required to settle the guarantee. Equity instruments These estimates are determined based on experience of similar transactions and history of past losses, supplemented by the judgement of management. The fee An equity instrument is any contract that evidences a residual interest in the assets of income earned is recognised on a straight line basis over the life of the guarantee. an entity after deducting all of its liabilities. Equity instruments issued by the Bank are recorded at the proceeds received, net of direct issue costs.

40 41 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability. The difference between the carrying value of the original financial liability and the consideration paid is recognized in profit or loss.The Bank derecognises financial liabilities when, and only when, the Bank’s obligations are discharged, cancelled or they expire.

Legal reserve

The legal reserve which is a statutory reserve to which no less 25% of the net profits after taxation shall be transferred each year until such fund is equal to the capital. When the legal reserve account equals the capital of the Bank, the amount to be transferred to the legal reserve account shall be 10% percent of the annual net profit.

Taxation

Income tax expense represents the tax currently payable.

Current taxation is provided on the basis of the results for the year as shown in the financial statements, adjusted in accordance with the tax legislation.

Retirement benefit costs

Staff retirement benefits are provided to some permanent employees by way of a provident fund to which the Bank and these employees contribute 14% and 7% of the individual monthly salaries, respectively. Other employees are included in a statutory pension scheme to which the Bank and these employees contribute 9% and 7% of the individual monthly salaries, respectively until the employer contribution reaches 11%.

42 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) b) Derecognition of financial liabilities Contingent liabilities A financial liability is derecognized when the obligation under the liability is Letters of credit, acceptances, guarantees and performance bonds are generally written by discharged or cancelled or expires. Where an existing financial liability is replaced by the Bank to support performance by a customer to third parties. The Bank will only be another from the same lender on substantially different terms, or the terms of an required to meet these obligations in the event of the customer’s default. These existing liability are substantially modified, such an exchange or modification is obligations are accounted for as off balance sheet transactions and disclosed as contingent treated as a de-recognition of the original liability and the recognition of a new liabilities. liability. The difference between the carrying value of the original financial liability and the consideration paid is recognized in profit or loss.The Bank derecognises Leases financial liabilities when, and only when, the Bank’s obligations are discharged, cancelled or they expire. Leases of property where the Bank assumes substantially all the benefits and risks of

ownership are classified as finance leases.All other leases are classified as operating Legal reserve leases.

The legal reserve which is a statutory reserve to which no less 25% of the net profits after Finance leases are capitalised at the estimated present value of the underlying lease taxation shall be transferred each year until such fund is equal to the capital. When the payments. Each lease payment is allocated between the liability and finance charges so legal reserve account equals the capital of the Bank, the amount to be transferred to the as to achieve a constant rate on the finance balance outstanding. The corresponding legal reserve account shall be 10% percent of the annual net profit. rental obligations, net of finance charge are included in other long-term payables. The

interest element of the finance charge is charged to the profit or loss over the lease Taxation period. The property acquired under finance leasing contracts is depreciated over the

useful life of the asset. Income tax expense represents the tax currently payable.

Rentals payable under operating leases are charged to income on a straight-line basis over Current taxation is provided on the basis of the results for the year as shown in the the term of the relevant lease. financial statements, adjusted in accordance with the tax legislation.

Dividends Retirement benefit costs

Dividends are charged to equity in the period in which they are declared. Proposed Staff retirement benefits are provided to some permanent employees by way of a dividends are not accrued until they have been ratified at the Annual General Meeting. provident fund to which the Bank and these employees contribute 14% and 7% of the individual monthly salaries, respectively. Other employees are included in a statutory Cash and cash equivalents pension scheme to which the Bank and these employees contribute 9% and 7% of the individual monthly salaries, respectively until the employer contribution reaches 11%. For the purposes of the statement of cash flows, cash equivalents include short term liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from Banks repayable within three months from the dates of the advances.

Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year

42 43 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING THE BANK’S ACCOUNTING POLICIES

In the process of applying the Bank’s accounting policies, management has made estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. These are dealt with below:

Critical judgements in applying the Bank’s accounting policies

Classification of leases of land as finance or operating leases

At the inception of each lease of land, the company considers the substance rather than the form of the lease contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are:

The lease transfers ownership of the asset to the lessee by the end of the lease term; The lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised; The lease term is for the major part of the economic life of the asset even if title is not transferred; At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; and The leased assets are of such a specialised nature that only the lessee can use them without major modifications.

The company also considers indicators of situations that individually or in combination could also lead to a lease being classified as a finance lease. Examples of such indicators include:

If the lessee can cancel the lease, the lessor's losses associated with the cancellation are borne by the lessee; gains or losses from the fluctuation in the fair value of the residual accrue to the lessee (for example, in the form of a rent rebate equalling most of the sales proceeds at the end of the lease); and the lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent

The Bank makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year areas discussed below:

44 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 NOTES FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING Currency:Ethiopian Birr THE BANK’S ACCOUNTING POLICIES

In the process of applying the Bank’s accounting policies, management has made CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING estimates and assumptions that affect the reported amounts of assets and liabilities within THE BANK’S ACCOUNTING POLICIES (CONTINUED) the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are Impairment losses on loans and advances believed to be reasonable under the circumstances. These are dealt with below: The Bank reviews its loan portfolios to assess impairment regularly. In determining Critical judgements in applying the Bank’s accounting policies whether an impairment loss should be recorded in the statement of comprehensive Classification of leases of land as finance or operating leases income, the Bank makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of At the inception of each lease of land, the company considers the substance rather loans, before a decrease can be identified with an individual loan in that portfolio. This than the form of the lease contract. Examples of situations that individually or in evidence may include observable data indicating that there has been an adverse change in combination would normally lead to a lease being classified as a finance lease are: the payment status of borrowers in a group, or national or local economic conditions that The lease transfers ownership of the asset to the lessee by the end of the lease correlate with defaults on assets in the Bank. term; Held -to-maturity investments The lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable The Bank follows a policy to classifying non-derivative financial assets with fixed or for it to be reasonably certain, at the inception of the lease, that the option will be determinable payments and fixed maturity as held-to-maturity. This classification exercised; requires significant judgement. In making this judgement, the loans and advances The lease term is for the major part of the economic life of the asset even if title is evaluates its intention and ability to hold such investments to maturity. If the loans and not transferred; advances fails to keep these investments to maturity other than for the specific At the inception of the lease the present value of the minimum lease payments circumstances – for example, selling an insignificant amount close to maturity – it will be amounts to at least substantially all of the fair value of the leased asset; and required to reclassify the entire class as available-for-sale. The investments would The leased assets are of such a specialised nature that only the lessee can use therefore be measured at fair value not amortised cost. them without major modifications.

The company also considers indicators of situations that individually or in 4 INTEREST INCOME combination could also lead to a lease being classified as a finance lease. Examples of such indicators include: 2016

If the lessee can cancel the lease, the lessor's losses associated with the cancellation are borne by the lessee; Loans and advances 1,412,273,493 1,090,910,083 National Bank of Ethiopia bills - Held to gains or losses from the fluctuation in the fair value of the residual accrue to the maturity 136,224,000 133,951,645 lessee (for example, in the form of a rent rebate equalling most of the sales Deposits with local banks 14,952 1,024,633 proceeds at the end of the lease); and the lessee has the ability to continue the Deposits with foreign banks 520,362 292,855 lease for a secondary period at a rent that is substantially lower than market rent 1,549,032,808 1,226,179,216

44 45 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

5 INTEREST EXPENSE

2016

Interest on savings deposits 349,393,594 303,971,523 Interest on fixed time deposits 285,386,415 222,034,044 634,780,008 526,005,567

6 FEES AND COMMISSION INCOME

Commissions and charges 188,181,434 207,528,862 Letters of credit fees 61,060,936 54,966,611 Letters of guarantee issued fees 83,364,063 46,367,390 Local transfers and others ______3,547 16,122 332,609,979 308,878,985

7 GAINS ON FOREIGN EXCHANGE DEALINGS

Gains on foreign currency dealings arose from trading in foreign currency transactions and also on the translation of foreign currency monetary assets and liabilities.

8 OTHER INCOME

Dividends 2,821,589 2,545,999 IFB-Murahaba revenue 9,742,649 1,194,092 Swift charge 1,668,389 1,068,474 Estimation fees 1,470,749 1,033,800 Rent 1,114,511 1,657,464 Sundry income 6,209,338 6,055,844 Gain on disposal of acquired property - 5,063,573 Correspondent charges 734,307 1,252,477 Gain on disposal of property and equipment 794,480 554,039 Postage 91,987 178,330 Cash surplus 146,988 103,495 Telephone, telex and fax 3,468 8,330 Legal fees 915 466 24,799,370 20,716,383

46 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 UNITED BANK SHARE COMPANY Currency:Ethiopian Birr NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr 5 INTEREST EXPENSE

2016 9 OPERATING EXPENSES 2016 Interest on savings deposits 349,393,594 303,971,523 Interest on fixed time deposits 285,386,415 222,034,044 Salaries and benefits 524,770,829 398,571,471 634,780,008 526,005,567 Office rent 115,923,108 93,598,862 Depreciation (note 20) 69,206,553 65,543,781 Stationery and printing 18,312,300 18,294,866 6 FEES AND COMMISSION INCOME IT and other related expenses 18,332,623 15,252,288 ATM shared costs 6,900,330 11,167,072 Commissions and charges 188,181,434 207,528,862 Communications 20,318,227 18,722,001 Letters of credit fees 61,060,936 54,966,611 Fuel and lubricants 11,090,950 10,187,831 Letters of guarantee issued fees 83,364,063 46,367,390 Insurance 10,266,559 9,012,525 Local transfers and others ______3,547 16,122 Advertising and publicity 9,053,857 9,750,883 332,609,979 308,878,985 Repairs and maintenance 8,557,383 6,579,571 Entertainment 5,274,134 5,304,370 7 GAINS ON FOREIGN EXCHANGE DEALINGS Per diems 1,658,605 2,101,448 Bank service charges 10,541,666 8,960,220 Gains on foreign currency dealings arose from trading in foreign currency transactions Sundries 3,582,579 4,409,983 and also on the translation of foreign currency monetary assets and liabilities. Card banking charges 3,528,027 3,999,222 Electricity and water 2,552,939 2,451,267 8 OTHER INCOME Transportation 1,952,923 1,369,913 Correspondent charges 1,374,624 1,488,342 Dividends 2,821,589 2,545,999 Cleaning supplies 1,350,023 1,173,500 IFB-Murahaba revenue 9,742,649 1,194,092 Swift charges 1,729,762 964,607 Swift charge 1,668,389 1,068,474 Audit fees 396,750 563,580 Estimation fees 1,470,749 1,033,800 Directors' transport allowance 400,300 204,169 Rent 1,114,511 1,657,464 Inauguration 199,873 204,653 Sundry income 6,209,338 6,055,844 Membership subscription 315,988 207,838 Gain on disposal of acquired property - 5,063,573 Donations 59,201 346,564 Correspondent charges 734,307 1,252,477 Licences and inspection fees 281,777 260,205 Gain on disposal of property and equipment 794,480 554,039 Revenue stamps 27,567 27,554 Postage 91,987 178,330 Consultancy fee 480,000 520,000 Cash surplus 146,988 103,495 Amortization of prepaid operating lease 1,469,081 803,172 Telephone, telex and fax 3,468 8,330 Finance cost on lease hold land ______- - Legal fees 915 466 849,908,539 692,154,724 24,799,370 20,716,383

46 47 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr 10 TAXATION

2016 a) Taxation charge

Current taxation based on the taxable profit for the Year at 30% 106,983,965 89,529,603 Tax charge for the year 106,983,965 89,529,603

b) Reconciliation of taxation chargeto the expected taxation based on accounting Profit

Accounting profit before taxation 488,699,274 428,544,911 Tax at the applicable rate of 30% 146,609,782 128,563,473 Tax effect of expenses not deductible for tax purposes: Entertainment 1,582,240 1,591,312 Other expenses 648,453 615,390 Donations 17,760 103,969 Depreciation difference per tax and accounting - - Tax effect of income taxed at lower rates/Exempt for tax purposes; - Dividend income (taxed at source) (846,477) (763,800) Interest income (taxed at source) (4,486) (307,390) Interest income (exempt) (156,109) (87,857) Interest on National Bank of Ethiopia bills (exempt) (40,867,200) (40,185,494) (39,625,819) (39,033,870) Taxation charge for the year 106,983,965 89,529,603

c) Tax payable

At the beginning of the year 89,529,603 76,919,097 Taxation charge for the year 106,983,965 89,529,603 Tax paid during the year (89,529,603) (76,919,097) At the end of the year 106,983,965 89,529,603

The Ethiopian Revenue and Customs Authority has not assessed the Bank since 2004.

48 UNITED BANK SHARE COMPANY UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr Currency:Ethiopian Birr 10 TAXATION 11 EARNINGS PER SHARE 2016 a) Taxation charge 2016 Current taxation based on the taxable profit for Profit attributable to shareholders of the Bank (Birr) 381,715,309 339,015,308 the Year at 30% 106,983,965 89,529,603 Weighted average number of shares held during the year 14,046,705 10,451,795 Tax charge for the year 106,983,965 89,529,603 Earnings per share – (of Birr each 100) 27.17 32.44

b) Reconciliation of taxation chargeto the expected taxation based on accounting Weighted average number of shares is based on the number of the days to year end the Profit shares were held by the Bank from the payment date for the paid up capital.

Accounting profit before taxation 488,699,274 428,544,911 12 CASH AND BANK BALANCES Tax at the applicable rate of 30% 146,609,782 128,563,473 Tax effect of expenses not deductible for tax Cash on hand 1,201,583,986 1,232,134,530 purposes: Balances with National Bank of Ethiopia: Entertainment 1,582,240 1,591,312 - Cash ratio requirement 890,000,000 680,000,000 Other expenses 648,453 615,390 - Payment and settlement account 18,956,977 148,042,913 Donations 17,760 103,969 Balances with domestic Banks 195,749,149 85,241,096 Depreciation difference per tax and accounting - - Balances with foreign Banks 880,210,468 773,291,640 Tax effect of income taxed at lower 3,186,500,580 2,918,710,179 rates/Exempt for tax purposes; - Dividend income (taxed at source) (846,477) (763,800) Interest income (taxed at source) (4,486) (307,390) The cash ratio requirement balance is non-interest bearing and is based on the value of Interest income (exempt) (156,109) (87,857) customer deposits as adjusted by the National Bank of Ethiopia requirements; as per Interest on National Bank of Ethiopia bills directive No SBB/55/2013. As at 30 June 2017, the cash ratio requirement was minimum (exempt) (40,867,200) (40,185,494) of 5% (2016-5%) of all eligible deposits. (39,625,819) (39,033,870) Taxation charge for the year 106,983,965 89,529,603 Cash and Bank balance includes Birr 260,837,315 (2016- ETB 189,780 758) collected from Interest Free Banking Operation. c) Tax payable

At the beginning of the year 89,529,603 76,919,097 Taxation charge for the year 106,983,965 89,529,603 Tax paid during the year (89,529,603) (76,919,097) At the end of the year 106,983,965 89,529,603

The Ethiopian Revenue and Customs Authority has not assessed the Bank since 2004.

48 49 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

13 GOVERNMENT SECURITIES 2016 National Bank of Ethiopia Bills held to maturity at 3% p.a - maturing during the year ending 30 June 2017 - 738,859,000 - maturing during the year ending 30 June 2018 639,441,000 639,441,000 - maturing during the year ending 30 June 2019 682,370,000 682,370,000 - maturing during the year ending 30 June 2020 1,183,210,000 1,183,210,000 - maturing during the year ending 30 June 2021 1,112,803,000 1,112,803,000 - maturing during the year ending 30 June 2022 1,218,481,000 - 4,836,305,000 4,356,683,000

Other Government bonds bearing interest at the rate of 5 % per annum repayable after 5 years 1,000,000 1,000,000 4,837,305,000 4,357,683,000

14 LOANS AND ADVANCES TO CUSTOMERS

Analysis by sector: Import 1,969,904,992 1,211,659,009 Export 2,521,608,208 1,764,722,720 Domestic trade and service 1,991,427,302 1,391,037,986 Manufacturing production 1,703,534,875 1,391,630,138 Building construction 1,341,740,887 865,141,159 Hotel and Tourism 507,452,670 417,887,961 Transport 718,672,008 497,150,598 Personal 841,560,639 594,734,313 Advance against import bills 86,229,841 88,001,039 Health service 75,860,480 45,374,680 Non-accrual loans-loans under litigation 104,096,689 173,423,881 Merchandise loan 46,013,154 68,144,514 11,908,101,744 8,508,907,998

Interest Free Financing 88,208,928 25,450,712 Less: Provision for impairment losses (note 16) (148,387,388) (110,983,600) 11,847,923,285 8,423,375,110

15 MATURITY OF GROSS LOANS AND ADVANCES(NET OF PROVISIONS)

2016 Maturing: Within three months 4,427,476,296 2,813,455,134 Within 3 – 12 months 1,919,683,457 1,445,212,310 After one year 5,500,763,533 4,102,267,386 At the end of the year 11,847,923,285 8,360,934,830

50 UNITED BANK SHARE COMPANY UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

Currency:Ethiopian Birr 2016 16 IMPAIRMENT LOSS ON LOANS AND ADVANCES 13 GOVERNMENT SECURITIES 2016 At the beginning of the year 110,983,600 83,872,888 National Bank of Ethiopia Bills held to maturity Provisions in the year 37,403,788 27,110,712 at 3% p.a At the end of the year 148,387,388 110,983,600 - maturing during the year ending 30 June 2017 - 738,859,000 17 INVESTMENT IN ASSOCIATE AND EQUITY SHARES - maturing during the year ending 30 June 2018 639,441,000 639,441,000 - maturing during the year ending 30 June 2019 682,370,000 682,370,000 Premium Switch Solution SC-30.11% - maturing during the year ending 30 June 2020 1,183,210,000 1,183,210,000 holding44,996 shares of Birr 1,000 each par - maturing during the year ending 30 June 2021 1,112,803,000 1,112,803,000 value (note 17.1) 44,996,000 44,996,000 - maturing during the year ending 30 June 2022 1,218,481,000 - Ethio Switch Share Company-6% holding11,370 4,836,305,000 4,356,683,000 shares of Birr 1,000 each par value 11,370,000 11,370,000 United Insurance Share Company-5% Other Government bonds bearing interest at the holding12,500 shares of Birr 1000 each par rate of 5 % per annum repayable after 5 years 1,000,000 1,000,000 value 12,500,000 12,500,000 4,837,305,000 4,357,683,000 Habesha Cement Share Company-4% holding14,892 shares of Birr 1,000 each par 14 LOANS AND ADVANCES TO CUSTOMERS value 14,892,000 14,892,000 Raya Brewery Share Company-<1% holding2,869 Analysis by sector: shares of Birr 1,000 each par value 2,869,000 2,869,000 Import 1,969,904,992 1,211,659,009 RAAZ transport Share Company -3% Export 2,521,608,208 1,764,722,720 holding5,000 shares of Birr 1,000 each par Domestic trade and service 1,991,427,302 1,391,037,986 value 5,000,000 5,000,000 Manufacturing production 1,703,534,875 1,391,630,138 91,627,000 91,627,000 Building construction 1,341,740,887 865,141,159 18 OTHER ASSETS Hotel and Tourism 507,452,670 417,887,961 Transport 718,672,008 497,150,598 Interest receivable (Note 18.2) 283,429,685 210,578,627 Personal 841,560,639 594,734,313 Prepaid rent 240,127,183 170,717,417 Advance against import bills 86,229,841 88,001,039 Advances (Note 18.1) 360,957,367 418,279,275 Health service 75,860,480 45,374,680 Staff debtor 62,405,378 48,019,552 Non-accrual loans-loans under litigation 104,096,689 173,423,881 Stocks 47,400,512 25,410,367 Merchandise loan 46,013,154 68,144,514 Security deposits 18,954,568 3,839,003 11,908,101,744 8,508,907,998 Interest free financing receivables 6,420,501 1,791,527 Inter branch 1,680,369 5,273,940 Interest Free Financing 88,208,928 25,450,712 Miscellaneous 191,727,219 110,655,771 Less: Provision for impairment losses (note 16) (148,387,388) (110,983,600) 1,213,102,782 994,565,479 11,847,923,285 8,423,375,110 Less: Provision for doubtful debts (4,458,456) (4,458,456) 1,208,654,326 990,107,023 15 MATURITY OF GROSS LOANS AND ADVANCES(NET OF PROVISIONS) 18.1 Advance represents amount paid to Head office building contractor. 2016 18.2 Age of interest receivables that are not past due Maturing: Up to 30 days 167,223,514 147,329,276 Within three months 4,427,476,296 2,813,455,134 30 – 60 days 90,697,499 58,079,663 Within 3 – 12 months 1,919,683,457 1,445,212,310 Above 60 days 25,508,672 5,169,688 After one year 5,500,763,533 4,102,267,386 At the end of the year 283,429,685 210,578,627 At the end of the year 11,847,923,285 8,360,934,830

50 51 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

2016

19 PROPERTIES HELD FOR SALE

At the beginning of the year 15,233,194 22,719,507 Added during the year 14,220,167 825,000 Sold during the year (335,000) (8,311,313) At the end of the year 29,320,361 15,233,194

Properties acquired through foreclosure and available for immediate sale in their present condition subject only to terms that are usual and customary for sales of such assets are accounted separately.The assets are measured at the lower of its carrying amount and fair value less costs to sell.

52 UNITED BANK SHARE COMPANY

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

) - rr 6 7 3 3 4 8 9 81 FOR THE YEAR ENDED 30 JUNE 2017 46 27) 35) 7

,97 8

Currency:Ethiopian Birr 7,3 5 8,2 7 0,4 0 0,4 0 5,1 0 8,9 4 an B i 43, 7 tal 95, 2 86, 7 148 , , 4 , 6 ,19 8 1,424, 1 2016 7,5 5 4,4 9 8,5 6 8,5 6 9,2 7 4,7 6

T o iop i 65, 5 ( 3 ( 2 ( 2 055 , 2 3 5 2 0 7 5 7 5 2 9 2 9

t h

1 , 19 PROPERTIES HELD FOR SALE

------n 9 6 6 0 6

ncy: E 77

At the beginning of the year 15,233,194 22,719,507 ess

g r 6,0 8 6,9 6 6,9 6 5,0 3 1,9 9 ___ Added during the year 14,220,167 825,000 ____ 00, 8 r o

_ Curr e structi o

Sold during the year (335,000) (8,311,313) p 6,0 3 2,3 3 2,3 3 5,1 1 7,4 5 ___ _ I n 66, 3

At the end of the year 29,320,361 15,233,194 1 4 2 1 2 1 2 1 4 2

Co n _

- ) ) Properties acquired through foreclosure and available for immediate sale in their - - s 5 re __ n g and present condition subject only to terms that are usual and customary for sales of such 759 ,783 ,543 ,345 ,345 ,480 ,092 ,309 it u ,98 1 ,54 2 1,8 2 r n

assets are accounted separately.The assets are measured at the lower of its carrying fitt i 2 0 1 4 805 , ___ _ ,88 8 ,88 2 ,45 0 ,45 0 ,86 1 ,63 6 ,22 7 F u ( 3 ( 2 9 , amount and fair value less costs to sell. 0,3 1 _ 6 1 2 7 9 7 9 2 0 3 0 4 0 1 0

) ) ) 6 6 9 ent 21) 92) ,724 ,186 ,864 ,938 ,101 ,394 ,56 2 ,25 3 ,39 2 1,7 9 1,7 9 1,0 9 p m Office 47, 4 33, 6 5 0 1 2 7 u i ,39 9 ,76 3 ,24 4 ,78 4 ,48 5 ,44 1 , 3 , 4 ( 1 ( 2 ( 6 2,3 8 2,3 8 2,4 7 E q 8 1 6 2 0 4 0 1 2 5 2 ( 1 ( 1 1 0 1 0 1 2

- - 3 1 8 8 6 4 ter ent

421 ,776 ,254 ,266 ,045 066) ___ m p u 1,2 5 1,5 0 3,6 9 3,6 9 1,8 8 4,5 6 5 , i p m

347 , 2 0 ( 5 ,74 4 ,74 3 ,33 0 ,50 3

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------gs __ 026 296 322

i n ,914 ,914 ,914 ,914 ___ l d 327 , 207 , 534 , NCIAL STATEMENT ___ _ ,14 5 ,14 5 ,14 5 ,14 5

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U N 20 FOR T NOT E 52 53 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

20 PROPERTY AND EQUIPMENT (CONT’D)

Furniture Motor Computer Office and Construction Buildings vehicles equipment Equipment fittings In progress Total DEPRECIA TION (continued)

At 1 July 2016 5,534,322 83,531,361 113,034,564 52,441,394 40,227,309 - 294,768,949 Charge for the year 1,207,296 18,159,271 23,809,080 14,014,002 12,016,903 - 69,207,152 Disposal ______- (1,791,656) (39,000) (40,307) ______- ______- (1,870,963)

At 30 June 2017 6,741,618 99,898,976 136,804,644 66,415,089 52,244,212 ______- 362,105,138

NET BOOK VALUE

At 30 JUNE 2017 17,404,296 72,636,481 71,427,241 56,056,010 48,067,613 427,451,996 693,044,239

At 30 JUNE 2016 18,611,592 70,170,323 73,509,134 49,940,402 39,223,036 212,336,966 463,791,455

Computer and IT related items includes Birr 3,044,408 used for Interest Free Banking Operation. 54 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

20 PROPERTY AND EQUIPMENT (CONT’D)

Furniture Motor Computer Office and Construction Buildings vehicles equipment Equipment fittings In progress Total DEPRECIA TION (continued)

At 30 June 2017 6,741,618 99,898,976 136,804,644 66,415,089 52,244,212 ______- 362,105,138

NET BOOK VALUE

At 30 JUNE 2017 17,404,296 72,636,481 71,427,241 56,056,010 48,067,613 427,451,996 693,044,239

At 30 JUNE 2016 18,611,592 70,170,323 73,509,134 49,940,402 39,223,036 212,336,966 463,791,455

Computer and IT related items includes Birr 3,044,408 used for Interest Free Banking Operation. 54 FOR T NOTE 21 UN 22 ITED B

Cooperat Publi Priva Fixed t Cooperat Publi Priva Savings depos Non Non Cooperat Publi Priva Payable ondemand Deposit Present Net book Curre At 1Jul At 1Jul Amort S FO LE The paym on use i

CU HE YE - - the ASEHO ST res res c agencies te sec c agencies te sec c agencies te sec AN nt year Bank t RMING PA ents as collateralo isation ime OME y an y an fr val ident non ident f lease AR ENDE iv iv iv K SH va o . to to to e e e leases m ue ati deposit T d 30June d 30June s anda s and s anda am lue r r r d LD he

R D

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55 or rs rr

UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr 22 CUSTOMER DEPOSITS (CONT’D)

2016 Deposit from interest free Banking Payable on demand Private Al Wadiah 59,346,414 46,652,473 Associations Al Wadiah 2,555,838 1,804,526 Corporate Al Wadiah 1,052,190 1,467,610 62,954,442 49,924,609 Savings deposits Private Al Wadiah 283,007,759 169,413,637 Associations Al Wadiah 133,891 56,711 Corporate Al Wadiah 778,860 422,726 283,920,510 169,893,074

346,874,952 219,817,683

16,505,124,988 13,037,642,186

MATURITY ANALYSIS OF CUSTOMER DEPOSITS Repayable: Within three months 1,849,533,428 1,383,959,832 Within 3-12 months 4,138,679,659 3,223,122,612 After one year 10,516,911,901 8,430,559,742 16,505,124,988 13,037,642,186

The Bank applies interest rates in conformity with the NBE directives. The minimum interest rate on saving deposit accounts as at 30 June 2017 as per the directive was 5% (2016- 5%).The effective interest rate on interest bearing customer deposits at 30 June 2017was 5% (2016- 5%).

23 DUE TO FINANCIAL INSTITUTIONS

Payable on demand 80,025,253 59,272,791 Savings deposits 7,659,274 5,682,747 Fixed time deposits 1,091,206,687 499,138,015 1,178,891,214 564,093,554

The Bank applies interest rates in conformity with the NBE directives. The minimum interest rate on saving deposit accounts as at 30 June 2017 as per the directive was 5% (2016 - 5%).

56 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 NOTES FORMING PART OF THE FINANCIAL STATEMENTS Currency:Ethiopian Birr FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr 24 OTHER LIABILITIES

22 CUSTOMER DEPOSITS (CONT’D) 2016

2016 Cashier payment orders 268,110,397 279,051,950 Deposit from interest free Banking Blocked current and saving accounts 139,005,761 114,760,966 Payable on demand Accruals 169,708,094 108,028,508 Private Al Wadiah 59,346,414 46,652,473 ATM Payable 42,352,939 62,495,258 Associations Al Wadiah 2,555,838 1,804,526 Outgoing Bank transfers 35,813,818 24,901,832 Corporate Al Wadiah 1,052,190 1,467,610 Deposits in respect of guarantees given 34,300,754 29,139,649 62,954,442 49,924,609 Old drafts outstanding 62,840,017 47,238,611 Savings deposits Local money transfers 17,711,587 21,052,533 Private Al Wadiah 283,007,759 169,413,637 Miscellaneous payables 82,839,131 57,817,479 Associations Al Wadiah 133,891 56,711 Dividends payable 35,118,332 55,635,313 Corporate Al Wadiah 778,860 422,726 Creditors 19,200,401 40,246,936 283,920,510 169,893,074 Taxes and stamp duty charges 13,180,883 9,259,834 Ethio Switch payable 101,641,772 8,004,766 346,874,952 219,817,683 Exchange payable to National Bank of Ethiopia 4,788,595 5,245,436 Dividend tax payable ______- 57,459 16,505,124,988 13,037,642,186 1,026,612,481 853,073,285

MATURITY ANALYSIS OF CUSTOMER 25 PAYABLE ON LEASEHOLD LAND DEPOSITS Repayable: Amounts payable under the lease agreement Within three months 1,849,533,428 1,383,959,832 Amount payable within 1 year 1,103,996 1,145,615 Within 3-12 months 4,138,679,659 3,223,122,612 Amount payable after 1 year 11,565,677 12,669,673 After one year 10,516,911,901 8,430,559,742 Total minimum lease payments 12,669,673 13,815,288 16,505,124,988 13,037,642,186 Less future finance charges (5,660,172) (6,367,693) Present value of minimum lease payments 7,009,502 7,447,595 The Bank applies interest rates in conformity with the NBE directives. The Less: Settlement during the year (438,094) (438,093) minimum interest rate on saving deposit accounts as at 30 June 2017 as per the 6,571,407 7,009,502 directive was 5% (2016- 5%).The effective interest rate on interest bearing customer deposits at 30 June 2017was 5% (2016- 5%). Amount payable within 1 year 438,094 438,093 Amounts payable after 1 year 6,133,313 6,571,409 23 DUE TO FINANCIAL INSTITUTIONS 6,571,407 7,009,502 Analysis by cash flow; Payable on demand 80,025,253 59,272,791 At the beginning of the year 7,009,502 7,447,595 Savings deposits 7,659,274 5,682,747 Financing repaid (438,095) (438,093) Fixed time deposits 1,091,206,687 499,138,015 At the end of the year 6,571,407 7,009,502 1,178,891,214 564,093,554 The lease obligations relate to the leasehold land on note 21.Lease obligations are The Bank applies interest rates in conformity with the NBE directives. The minimum payable in annual instalments of Birr438, 093 plus interest for twenty years. interest rate on saving deposit accounts as at 30 June 2017 as per the directive was 5% The weighted average effective rate of interest on the obligations under the lease (2016 - 5%). agreement as at 30 June 2017 was 9.5% per annum (2016-9.5%).

57 56 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

26 MARGINS HELD ON LETTERS OF CREDIT

These represents cash deducted from customers account for the new letters of credit issued/opened on behalf of customers.

27 SHARE CAPITAL

2016 Authorised: 20,000,000 ordinary shares of ETB100 each 2,000,000,000 2,000,000,000

Issued and fully paid: 15,575,774 shares of ETB100 each (2016- 12,518,936) 1,557,577,452 1,251,893,645

The movement in share capital is as follows:

No. of shares Share capital Share premium Birr Birr At 1 July 2016 12,518,936 1,251,893,645 8,236,053 Issue of ordinary shares 3,056,838 305,683,807 17,812,118 Dividend paid ______- ______- (7,833,395) At 30 June 2017 15,575,775 1,557,577,452 18,214,777

28 LEGAL RESERVE

The legal reserveis a statutory reserve to which no less 25% of the net profits after taxation shall be transferred each year until such fund is equal to the capital. When the legal reserve account equals the capital of the Bank, the amount to be transferred to the legal reserve account shall be 10% percent of the annual net profit.

58 UNITED BANK SHARE COMPANY UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr Currency:Ethiopian Birr

26 MARGINS HELD ON LETTERS OF CREDIT 29 NOTES TO THE STATEMENT OF CASH FLOWS

These represents cash deducted from customers account for the new letters of credit (a) Reconciliation of profit before taxation to cash generated from operating issued/opened on behalf of customers. activities.

27 SHARE CAPITAL 2016

2016 Profit before taxation 488,699,274 428,544,911 Authorised: Depreciation (note 20) 69,206,553 65,543,782 20,000,000 ordinary shares of ETB100 each 2,000,000,000 2,000,000,000 Impairment loss on loans and advances 37,403,788 27,110,712 Amortisation of leasehold land (note 21) 803,172 803,172 Issued and fully paid: Gain/loss on disposal of fixed assets (794,480) (554,039) 15,575,774 shares of ETB100 each (2016- 12,518,936) Gain on disposal of acquired property (note 9) - (5,063,573) 1,557,577,452 1,251,893,645 Working capital changes: Loans and advances to customers (3,461,951,962) (1,674,274,977)

The movement in share capital is as follows: Purchase of Government securities (479,622,000) (305,979,991) Other assets (218,547,299) (619,562,125) No. of shares Share capital Share premium Customer deposits 3,467,482,802 1,873,142,980 Birr Birr Deposit due to banking institutions 614,797,660 (75,769,789) At 1 July 2016 12,518,936 1,251,893,645 8,236,053 Other liabilities 173,539,198 295,137,642 Issue of ordinary shares 3,056,838 305,683,807 17,812,118 Margins held on letters of credit (82,941,880) 418,068,097 Dividend paid ______- ______- (7,833,395) Cash generated/ from operating activities 608,074,826 427,146,800 At 30 June 2017 15,575,775 1,557,577,452 18,214,777

28 LEGAL RESERVE (b) Analysis of the balances of cashand cash equivalents

The legal reserveis a statutory reserve to which no less 25% of the net profits after Cash on hand (note 13) 1,201,583,986 1,232,134,530 taxation shall be transferred each year until such fund is equal to the capital. When the Balances with National Bank of Ethiopia (note legal reserve account equals the capital of the Bank, the amount to be transferred to the 13) 18,956,977 148,042,913 legal reserve account shall be 10% percent of the annual net profit. National Bank of Ethiopia cash ratio (note 13) 890,000,000 680,000,000 Placements and balances due from banking institutions -Domestic Banks (note 13) 195,749,149 85,241,096 -Foreign Banks (note 13) 880,210,468 773,291,640 3,186,500,580 2,918,710,179

For the purposes of the cash flow statement, cash equivalents include short term liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired.

58 59 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

30 CAPITAL MANAGEMENT

The Bank’s objectives when managing capital are:

To safeguard the Bank’s ability to continue as a going concern so that it can continue to provide returns for the shareholders and benefits for the other stakeholders.

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).

Regulatory capital

Capital 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.

With effect from 19 September 2011, the National Bank of Ethiopia requires that:

a) The minimum paid up capital required to obtain a Banking business license shall be Birr500 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. For existing Banks, whose paid up capital is below Birr500 million shall raise their paid-up capital to the said amount by June 30, 2016.

b) The Bankat a minimum maintains a capital to risk weighted assets ratio of 8% at alltimes.

The Bank is also required to maintain a legal reserve which is a statutory reserve to which no less 25% of the net profits after taxation shall be transferred each year until such fund is equal to the capital. When the legal reserve account equals the capital of the Bank, the amount to be transferred to the legal reserve account shall be 10% percent of the annual net profit.

The Bank had met all the above requirements by the National Bank of Ethiopia as at 30 June 2017 and 30 June 2016. 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. 60 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Currency:Ethiopian Birr

31 RISK MANAGEMENT OBJECTIVES AND POLICIES

The Bank has exposure to the following risks from its use of financial instruments:

credit risk liquidity risk market risks

Risk management framework

Risk management is one component of all core banking processes of the Bank. In its day-to-day activities the Bank is exposed to various types of Banking risks, the most important of which are credit risk, liquidity risk, foreign exchange risk, interest rate risk and operational risk. The Bank has established a comprehensive risk management system in line with internationally accepted risk management principles and best practices with the necessary adoption to suit its core business activity.

The Bank’s risk management and control is based on the following key principles

The board of Directors approves the risk management policies of the Bank and ensures their implementation.

The management is responsible for implementing the policies in a manner that limits risks associated with each risk exposure.

Appropriate and effective internal control exists to safeguard assets and to ensure compliance with relevant laws, regulations and institutional policies.

The risk management and monitoring is supported by a management information system that supplies timely and consolidated reports on the financial conditions, operating performance and risk exposure of the Bank.

The Independent Risk Management and Compliance Department is established to review compliance with the approved risk management policies and various risk related committees are established which are responsible for the implementation of the risk management policies.

(i) Credit risk

Credit risk is the financial exposure resulting from a Bank’s dependence on another party to discharge an obligation as agreed and cause the Bank to incur a financial loss. The Bank has established a credit risk management system on the basis of maximizing the return on its assets while keeping its credit exposure within acceptable limits. The Bank regularly reviews its credit portfolio quality, provisioning requirements and customer exposure.

A credit risk management committee is responsible for implementing the credit risk management policy of the Bank. The Bank’s loans and advances are diversified in various sectors as shown in note 15 to the financial statements.

61 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Maximum exposure to credit risk before collateral held or other credit enhancements

The table below represents the maximum credit risk exposure on monetary financial assets to the Bank at 30 June 2017 and 30 June 2016, without taking into account any collateral held or other credit enhancements attached.

On balance sheet items

2016

Government securities held to maturity 4,837,305,000 4,357,683,000 Deposits and balances due from banking institutions Local currency 1,104,706,126 913,284,009 Foreign currency 880,210,468 773,291,640 1,984,916,594 1,686,575,649

Loan and advances to customers 11,996,310,672 8,534,358,710 18,818,532,267 14,578,617,359

Loans and advances to customers are secured by collateral in the form of mortgage interests over property and other registered securities over assets.

The Bank does not perceive any significant credit risk on the following financial assets:

• Investments in Government securities and balances with National Bank of Ethiopia. • Deposits and balances due from banking institutions.

Investments in Government securities are deemed to be adequately secured by the Government of the Federal Democratic Republic of Ethiopia that has no history of default.

The credit risk on the deposits and balances due from banking institutions is considered to be low because the counterparties are Banks with no history of default.

62 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

i) Credit risk (Continued)

Classification of loans and advances

Gross Impairment Net amounts allowances amounts Birr Birr Birr %

2017

Neither past due nor impaired 11,548,413,934 115,484,139 11,432,929,795 96% Past due but not impaired 351,978,640 10,559,359 341,419,281 3% Impaired 95,918,098 22,343,889 73,574,209 1% 11,996,310,672 148,387,387 11,847,923,285 100%

2016

Neither past due nor impaired 8,134,180,661 81,341,807 8,052,838,854 96% Past due but not impaired 257,043,964 7,711,319 249,332,645 3% Impaired 143,134,085 21,930,475 121,203,610 1% 8,534,358,710 110,983,600 8,423,375,110 100%

No other financial assets are either past due or impaired.

Loans and advances that are neither past due nor impaired

The Bank classifies loans and advances under this category for those exposures that are up to date and in line with contractual agreements. Such loans would have demonstrated financial conditions, risk factors and capacity to repay that are acceptable. These exposures will normally be maintained largely within approved product programs and with no signs of impairment or distress. These exposures are categorised as pass accounts in line with National Bank of Ethiopia (NBE) directives and a provision at 1 % is made through profit or loss.

Loans and advances that are past due but not impaired

These are loans and advances where contractual interest or principal payments are past due by less than 90 days but the Bank believes that impairment is not appropriate on the basis of the level of security/collateral available and/or the stage of collection of amounts owed to the Bank. These exposures are categorised as special mention accounts in line with National Bank of Ethiopia (NBE) directives and a collective impairment allowance of 3% made to cover losses which have been incurred but have not yet been identified.

63 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Impaired loans and advances

Impaired loans and advances are those for which the Bank determines that it will be unable to collect all principal and interest due according to the contractual terms of the loan agreements. These exposures are categorised as substandard, doubtful and loss accounts in line with National Bank of Ethiopia (NBE) directives and a collective impairment allowance of 20%, 50% and 100% respectively made to cover losses which have been incurred but have not yet been identified. According to the National Bank of Ethiopia directives, loans and advances overdue by above 90 days are considered non-performing.

Concentration of risk

The Bank monitors concentrations of credit risk by sector. An analysis of concentrations of credit risk at the reporting date is shown below:

Loans and advances

2017 2016 % Birr Birr % Export 2,521,608,208 21% 1,764,722,720 21% Import 1,991,427,302 14% 1,211,659,009 14% Domestic trade and services 1,969,904,992 16% 1,391,037,986 16% Manufacturing 1,703,534,875 16% 1,391,630,138 16% Building construction 1,341,740,887 10% 865,141,159 10% Transport 718,672,008 6% 497,150,598 6% Personal 841,560,639 7% 594,734,313 7% Advances against import bills 86,229,841 1% 88,001,039 1% Merchandise 46,013,154 1% 68,144,514 1% Health service 75,860,480 1% 45,374,680 1% Hotel and tourism 507,452,670 5% 417,887,961 5% Non-accrual loans 104,096,689 2% 173,423,881 2% 11,908,101,745 100.0% 8,508,907,998 100.0% Interest free financing 88,208,928 25,450,712 11,996,310,672 8,534,358,710

The Bank manages the concentration of risk through regular reviews by the Risk Management Department which is reported quarterly to senior management and the Board of Directors.

64 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS 31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) FOR THE YEAR ENDED 30 JUNE 2017

Impaired loans and advances 31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) Impaired loans and advances are those for which the Bank determines that it will be unable to collect all principal and interest due according to the contractual terms of the Collateral held loan agreements. These exposures are categorised as substandard, doubtful and loss accounts in line with National Bank of Ethiopia (NBE) directives and a collective The Bank holds collateral value Birr21,848,104,045 (2016 - Birr 15,493,854,014) impairment allowance of 20%, 50% and 100% respectively made to cover losses which against loans and advances to customers in the form of mortgage interests over have been incurred but have not yet been identified. property and other registered securities over assets. Estimates of fair value are According to the National Bank of Ethiopia directives, loans and advances overdue by based on the value of collateral assessed at the time of borrowing, and generally above 90 days are considered non-performing. are not updated except when a loan is individually assessed as impaired. Collateral generally is not held over deposits and balances due from Banks. Concentration of risk Collateral usually is not held against government securities, and no such collateral was held at 30 June 2017 and 30 June 2016. The Bank monitors concentrations of credit risk by sector. An analysis of concentrations of credit risk at the reporting date is shown below: Write-off policy

Loans and advances The Bank writes off a loan/security balance (and any related allowances for impairment losses) when credit department determines that the loans/securities 2017 2016 are uncollectible. This determination is reached after considering information % Birr Birr % such as the occurrence of significant changes in the borrower/issuer’s financial Export 2,521,608,208 21% 1,764,722,720 21% position such that the borrower/issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For Import 1,991,427,302 14% 1,211,659,009 14% smaller balance standardised loans, charge off decisions generally are based on a Domestic trade and services 1,969,904,992 16% 1,391,037,986 16% product specific past due status. Manufacturing 1,703,534,875 16% 1,391,630,138 16% Building construction 1,341,740,887 10% 865,141,159 10% (ii) Liquidity risk Transport 718,672,008 6% 497,150,598 6% Personal 841,560,639 7% 594,734,313 7% Liquidity risk arises in the general funding activities of the Bank and the Advances against import bills 86,229,841 1% 88,001,039 1% management of positions. It includes the risk of being unable to fund assets at Merchandise 46,013,154 1% 68,144,514 1% appropriate maturities and rates and the risk of being unable to liquidate an asset Health service 75,860,480 1% 45,374,680 1% at a reasonable price and in an appropriate time frame. The Bank has a reasonable Hotel and tourism 507,452,670 5% 417,887,961 5% funding base. Funds are raised mainly from customers’ deposits. Non-accrual loans 104,096,689 2% 173,423,881 2% An asset and liability management committee is responsible for managing funding 11,908,101,745 100.0% 8,508,907,998 100.0% mismatches and attaining the desired level of liquidity in the manner described in Interest free financing 88,208,928 25,450,712 the risk management policy. 11,996,310,672 8,534,358,710

The Bank manages the concentration of risk through regular reviews by the Risk Management Department which is reported quarterly to senior management and the Board of Directors.

64 65 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Market risk

a) Foreign exchange risk

Foreign exchange risk results from changes in exchange rates between a Bank's domestic currency and other currencies. Foreign exchange risks are controlled by maintaining balances in major currencies whose exchange rates against the reporting currency have always been appreciating. The Bank settles foreign exchange transactions of customers at the exchange rate prevailing on the date of the transactions. Hence, customers bear the cost of any increase in the exchange rates. Exchange rates are controlled by the National Bank of Ethiopia.

The table below summarises the Bank’s exposure to foreign currency exchange rate risk at 30 June 2017 and 30 June 2016.Included in the table are the Bank’s financial instruments, categorized by currency that are subject to foreign currency exposure.

USD GBP EURO YEN AED Total At 30 June 2017

Financial Assets Cash and Bank balances 865 ,342,025 3 ,916,047 6,651,639 4,086,811 213,946 880,210,468 Financial liabilities Customer deposits 364,849,720 918,272 9,428,532 - 375,196,524 Margins held 73,072,256 179,255 17,891,966 9,042,796 100,186,273 Net foreign currency exposure in Birr 427,420,049 2,818,520 (20,668,859) (4,955,985) 213,946 404,827,672

At 30 June 2016

Net foreign currency exposure in Birr 490,331,412 6,666,023 (10,090,494) 236,089 _____- 487,143,029

The exchange rates used for translating the major foreign currency balances as at year end were as follows:

2016

US Dollar 23.5703 22.0184 GB Pound 30.5589 29,5773 Euro 26.8819 24.4030 YEN 0.209100 0.216648 AED 6.4165 -

Foreign currency risk stress test

The table below summarizes the estimated impact of the changes in exchange rate of the Ethiopian Birr against the three major currencies traded by the Bank: US Dollar, British Pound and Euroon the results for the year and net assets of a 10% decline/appreciation

10% appreciation/ depreciation of the Ethiopian Birr +/(-) 40,048,278 +/(-) 48,714,303

66 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) 31 RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

Market risk b) Interest rate risk (continued) a) Foreign exchange risk Interest rate risk is a risk resulting from changes in interest rates. It is the probability that the rising and falling of interest rates will adversely affect the Bank’s interest Foreign exchange risk results from changes in exchange rates between a Bank's margin or the value of its net worth. The Bank often revises its lending rate across domestic currency and other currencies. Foreign exchange risks are controlled by segments of the credit portfolio based on the changes in the cost of funds, reserve maintaining balances in major currencies whose exchange rates against the reporting requirements and the perceived risk in each credit portfolio segment to keep the currency have always been appreciating. The Bank settles foreign exchange overall profitability. transactions of customers at the exchange rate prevailing on the date of the transactions. Hence, customers bear the cost of any increase in the exchange rates. The asset and liability management committee is responsible for managing rate- Exchange rates are controlled by the National Bank of Ethiopia. sensitive assets and liabilities and the effects of rate, volume and mix changes in order to preserve and optimize the interest return. The Bank has the discretion of The table below summarises the Bank’s exposure to foreign currency exchange rate setting and revising interest rates but it is required to notify the National Bank of risk at 30 June 2017 and 30 June 2016.Included in the table are the Bank’s financial Ethiopia of any such changes accompanied by Board approvals. instruments, categorized by currency that are subject to foreign currency exposure. The impact that an immediate hypothetical increase or decrease in interest rates of 10% applied at the beginning of the year would have on the profit for the year USD GBP EURO YEN AED Total At 30 June 2017 assuming a growing balance sheet and current interest rate risk profile would be as follows: Financial Assets Cash and Bank balances 865 ,342,025 3 ,916,047 6,651,639 4,086,811 213,946 880,210,468 2016 Financial liabilities Customer deposits 364,849,720 918,272 9,428,532 - 375,196,524 10% increase in interest rates 63,478,000 88,482,631 Margins held 73,072,256 179,255 17,891,966 9,042,796 100,186,273 Net foreign currency exposure in Birr 427,420,049 2,818,520 (20,668,859) (4,955,985) 213,946 404,827,672

At 30 June 2016 10% decrease in interest rates (63,478,000) (88,482,631)

Net foreign currency exposure in Birr 490,331,412 6,666,023 (10,090,494) 236,089 _____- 487,143,029 The model does not take into account any corrective action in response to interest rate movements, particularly in adverse situations. The exchange rates used for translating the major foreign currency balances as at year end were as follows: Anti-money laundering

2016 The Bank has established an Anti-Money laundering (AML) and Combating Terrorist Financing (CTF) Compliance Function under Risk Management and Compliance Department. This unit is US Dollar 23.5703 22.0184 fully dedicated to handle all the AML/CTF review process and activities according to the GB Pound 30.5589 29,5773 requirement of Prevention and Suppression of Money Laundering and Financing of Terrorism Euro 26.8819 24.4030 Proclamation # 780/2013 and Financial Intelligence Center’s directives on the Financial AML YEN 0.209100 0.216648 and CTF compliance (FIC Directives # 01/2014). AED 6.4165 - The Bank’s Board has approved policies and procedures in place to comply with the obligation to identify customers during the process of initial customer on-boarding as required by legislation. Foreign currency risk stress test Ongoing customer due diligence is also conducted on regular basis to identify suspicious transactions related to money laundering and terrorist financing. Records in support of The table below summarizes the estimated impact of the changes in exchange rate transactions and customers’ identification documents are maintained and kept for ten (10) years of the Ethiopian Birr against the three major currencies traded by the Bank: US as required by the legislation. Dollar, British Pound and Euroon the results for the year and net assets of a 10% The Bank report suspicious transactions (STR) up on identification and all cash transactions decline/appreciation exceeded Birr 300,000 on weekly basis to Financial Intelligence Center as required by legislation. Most prominently, the Bank delivers periodic training to its employees about the detection and 10% appreciation/ depreciation of the Ethiopian Birr +/(-) 40,048,278 +/(-) 48,714,303 reporting process for suspicious activities, customer identification procedures, ongoing due diligence, changes to AML/CTF legislation, and any emerging risks. 66 67 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

32 CONTINGENCIES AND COMMITMENTS INCLUDING OFF BALANCE SHEET ITEMS

(a) Contingent liabilities

i. In the ordinary course of business, the Bank conducts business involving guarantees and acceptances. These facilities are offset by corresponding obligations of third parties. At the year end, the contingencies were as follows;

2016

Letters of credit 881,074,234 859,129,699 Letters of guarantee and performance bonds 1,830,683,029 1,367,952,106 2,711,156,039 2,227,081,805

Letters of credit commit the Bank to make payments to third parties, on production of documents, and the amounts are subsequently reimbursed by customers.

Letters of guarantee are issued by the Bank, on behalf of customers, to guarantee performance by customers to third parties. The Bank will only be required to meet these obligations in the event of default by the customers.

The Bank holds collateral, letters of undertaking or other security in respect of the guarantee issued.

ii. Different plaintiffs sued the Bank with total amount Birr31,952,656 (2016 - Birr9,304,164). The cases are still pending and the Bank has not recognized the potential losses since the management believe that the cases will be decided in favour of the Bank.

(b) Other commitments

Undrawn loans and advances 725,727,274 1,057,510,534 Subscribed shares in Premier Switch Solutions Share Capital not yet paid up 5,200,000 5,200,000 Capital expenditure approved but not incurred 50,157,046 24,062,193 781,084,320 1,086,772,727

This relates to off balance sheet items as follows; Bills in process of collection 18,675,58317,101,090 51,774,538 Export cash against document 17,101,090- - Accrued interest on loans under litigation 13,884,355 20,490,646 and non-performing loans 49,661,028 72,265,184

68 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS UNITED BANK SHARE COMPANY FOR THE YEAR ENDED 30 JUNE 2017 NOTES FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2017 32 CONTINGENCIES AND COMMITMENTS INCLUDING OFF BALANCE SHEET ITEMS

(a) Contingent liabilities 33 RELATED PARTY TRANSACTIONS i. In the ordinary course of business, the Bank conducts business involving Parties are considered to be related if one party has the ability to control the other party or guarantees and acceptances. These facilities are offset by corresponding exercise significant influence over the other party in making financial or operational obligations of third parties. At the year end, the contingencies were as follows; decisions.

2016 2016 2016

Letters of credit 881,074,234 859,129,699 Loans and advances at 30 June 176,324,506 88,281,162 Letters of guarantee and performance bonds 1,830,683,029 1,367,952,106 Customers’ deposits at 30 June 10,798,408 15,948,830 2,711,156,039 2,227,081,805 Interest income for the year 11,915,463 11,915,677 Interest expense for the year 129,874 205,389 Letters of credit commit the Bank to make payments to third parties, on production of documents, and the amounts are subsequently reimbursed by Key management compensation customers. Directors’ remuneration: Letters of guarantee are issued by the Bank, on behalf of customers, to guarantee Annual compensation 400,000 400,000 performance by customers to third parties. The Bank will only be required to meet Other allowances 400,300 204,169 these obligations in the event of default by the customers.

The Bank holds collateral, letters of undertaking or other security in respect of the Annual Board compensation is determined and approved at the Annual General meeting guarantee issued. of the shareholders of the Bank not exceeding ETB 50,000 per member per annum as per SBB 49 of 2011. The National Bank has issued a revised directive that will increase the ii. Different plaintiffs sued the Bank with total amount Birr31,952,656 (2016 - minimum annual board compensation to ETB100,000 per member per annum as per SBB Birr9,304,164). The cases are still pending and the Bank has not recognized the 63 of 2016, effective since 1st day of June 2016. potential losses since the management believe that the cases will be decided in favour of the Bank.

(b) Other commitments

68 69 UNITED BANK SHARE COMPANY NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

34 COMMITMENTS UNDER OPERATING LEASES

The Bank rents several offices under operating leases. The rents contracts are for an average of three to five years, with fixed rentals over the same period.

2016 Minimum payments under operating leases recognised As an expense during the year 115,923,108 93,598,862

At the year end, the Bank has outstanding commitments under cancellable operating leases that fall due as follows:

Within one year 105,826,213 76,072,508 Later than one year but within five years 133,713,481 149,797,931 Later than five years 588,489 3,527,510 240,128,183 229,397,949

35 RETIREMENT BENEFIT OBLIGATIONS

Staff retirement benefits are provided to some permanent employees by way of a provident fund to which the Bank and these employees contribute 14% and 7% of the individual monthly salaries, respectively. Other employees are included in a statutory pension scheme to which the Bank and these employees contribute 11% and 7% of the individual monthly salaries, respectively. For the year ended 30 June 2017 the Bank contributed Birr45,595,743 (30 June 2016 – Birr33,607,669) which has been charged to the profit or loss.

36 EVENTS AFTER THE REPORTING PERIOD

No significant events after the reporting period have come to the attention of the Directors that require disclosure in the financial statements.

37 PROPOSED DIVIDENDS

Proposed dividends are not accounted for until they have been ratified at the Annual General Meeting. The dividend proposal to be presented to the Annual General meeting had not been determined at the date of approval of these financial statements.

38 CURRENCY

The financial statements are presented in Ethiopian Birr (Birr).

70 UNITED BANK SHARE COMPANY UNITED BANK NOTES FORMING PART OF THE FINANCIAL STATEMENTS CITY BRANCHES FOR THE YEAR ENDED 30 JUNE 2017 S.NO. BRANCHES LOCATION ADDRESS 1 ABA KORAN CHEW BERENDA AREA +251 111 266 043 34 COMMITMENTS UNDER OPERATING LEASES 2 ABUNE PETROS ABUNE PETROS SQUARE, ON THE ROAD TO PAULOS HOSPITAL +251 111 266 080 3 ADDISU GEBEYA DAT BUILDING +251 111 275 392 4 AFINCHO BER ON THE ROAD FROM AFINCHO BER TO SIDIST KILO +251 111 264 702 The Bank rents several offices under operating leases. The rents contracts are for an 5 AFRICA AVENUE WOLLO SEFER INFRONT OF X-KARAMARA HOTEL +251 115 549 718 average of three to five years, with fixed rentals over the same period. 6 AKAKI GARA DUBA BEFORE REACHING AKAKI YESHI TOTAL, AT BELAY-AB MOTORS BUILDING +251 114 715 832 7 ALEM BANK ALEM BANK +251 113 694 761 8 ALEM GENA ALEM GENA +251 113 662 022 2016 9 ANBESA GIBI AT THE LEADERSHIP INSTITUTE BUILDING +251 111 542 376 Minimum payments under operating leases recognised 10 ARAT KILLO INFRONT OF BERHAN ENA SELAM PRINTING ENTERPRISE +251 111 264 365 As an expense during the year 115,923,108 93,598,862 11 AYAT AYAT SQUARE ON THE WAY TO SENDAFA +251 116 390 208 12 AYAT MALL AYAT MALL BUILDING +251 116 391 435 13 AYER TENA SAMI BUILDING +251 113 470 597 At the year end, the Bank has outstanding commitments under cancellable operating 14 BALDERAS YEKA SITE CONDOMINIUM HOUSES, INFRONT OF GATE ONE +251 116 674 148 leases that fall due as follows: 15 BAMBIS NEXT TO BAMBIS SUPERMARKET +251 115 578 930 16 BEKLO BET MIKWOR PLAZA BUILDING +251 114 655 226 Within one year 105,826,213 76,072,508 17 BESHALE IN SIDE BESHALE HOTEL BUILDING +251 116 670 832 18 BETHEL INFRONT OF BETHEL HOSPITAL +251 113 492 379 Later than one year but within five years 133,713,481 149,797,931 19 BIRR AMBA MERKATO, INFRONT OF AMEDE MARKET +251 112 762 200 Later than five years 588,489 3,527,510 20 BISRATE GEBRIEL ABEBECH BUILDING +251 113 726 696 240,128,183 229,397,949 21 BOLE OLOMPIA INFRONT OF SHEWA BAKERY +251 115 521 020 22 BOLE BULBULA BOLE BULBULA ON THE ROAD TO CATHOLIC CHURCH +251 114 714 091 23 BOLE MEDHANIALEM MAMITU ALAMIREW BUILDING +251 116 625 924 24 BOMB TERA AFRICA MARKET CENTER +251 112 781 727 35 RETIREMENT BENEFIT OBLIGATIONS 25 BURAYU BURAYU TOWN +251 112 840 644 26 CATHEDRAL INFRONT OF CATHEDRAL SCHOOL +251 111 559 993 27 CINEMA RAS CINEMA RAS, AT ADMASS BUILDING +251 112 734 715 Staff retirement benefits are provided to some permanent employees by way of a 28 CMC SHOA LEMLEM BUILDING +251 116 478 564 provident fund to which the Bank and these employees contribute 14% and 7% of the 29 D’AFRIQUE ON THE ROAD OF MEXICO SQUARE TO STH POLICE STATION +251 115 323 030 individual monthly salaries, respectively. Other employees are included in a statutory 30 ECA ILILIY HOTEL AREA +251 118 698 003 pension scheme to which the Bank and these employees contribute 11% and 7% of the 31 ENDERASIE ON THE ROAD FROM TOTAL KAZANCHIS TO ENDERASIE AREA, +251 115 579 595 32 FERENSAY LEGASION FRENCH EMBASSY AREA +251 111 548 464 individual monthly salaries, respectively. For the year ended 30 June 2017 the Bank 33 FIGA BESHALE ON THE ROAD FROM JACKROSS SQUARE TO ST. SAHLITE MIHIRET CHURCH, +251 116 544 782 contributed Birr45,595,743 (30 June 2016 – Birr33,607,669) which has been charged to 34 FURI SEBETA TOWN, INFRONT OF NOC OIL STATION +251 118 696 813 the profit or loss. 35 GANDHI INFRONT OF GANDHI HOSPITAL +251 115 549 799 36 GELAN CONDOMINI. GELAN +251 116 674 497 37 GELAN DRY PORT IN SIDE GELAN DRY PORT OFFICE +251 114 712 258 36 EVENTS AFTER THE REPORTING PERIOD 38 GENET TSELERE BUILDING +251 115 528 252 39 GERJI GERJI SUNSHINE APARTMENT +251 116 297 593 No significant events after the reporting period have come to the attention of the 40 GOFA IN FRONT OF GOFA HOTEL +251 114 163 900 Directors that require disclosure in the financial statements. 41 GOFA MAZORIA ON THE ROAD FROM KERA TO GOFA +251 114 702 305 42 GOTERA WELOSEFER AKABABI +251 114 700 912 43 GULELLE ADMAS BUILDING +251 112 595 201 37 PROPOSED DIVIDENDS 44 HAYA ARAT HAYA ARAT +251 116 674 497 45 HAYAHULET HAYAHULET NEAR WOSSEN BUILDING +251 116 639 525 Proposed dividends are not accounted for until they have been ratified at the Annual 46 HIBER AROUND EDNA MALL INFRONT OF HARMONY HOTEL +251 116 670 308 General Meeting. The dividend proposal to be presented to the Annual General meeting 47 HILTON HILTON HOTEL +251 115 536 845 had not been determined at the date of approval of these financial statements. 48 IMPERIAL IMPERIAL +251 114 609 416 49 ITEGUE TAITU ETEGUE TAITU HOTEL +251 111 576 175 50 JACKROS ON THE ROAD FROM JACKROS SQUARE TO ST. SAHILTEMIHRET CHURCH +251 116 677 992 38 CURRENCY 51 JEMO JEMO CONDOMINIUM FROM ST.MICKEL SQUARE +251 114 713 362 52 KALITY ZH HOUSE +251 114 422 345 The financial statements are presented in Ethiopian Birr (Birr). 53 KALITY SALO KALITY TOTAL NEAR KAFDOM CINEMA +251 114 716 003 54 KEBENA BEL-AIR AREA +251 111 246 510 55 KECHENE KECHENE MEDHANEALEM CHURCH +251 111 262 963 56 KERA BULGARIA NEAR TO NOC GAS STATION +251 114 706 447 57 KOLFE 18 MAZORIA, NOC BUILDING +251 112 800 426 58 KOTEBE KOTEBE BIRETA BIRET +251 116 675 254 59 LAMBERET LAMBERET AREA, OPPOSITE MANRASHIWA HOTEL. +251 116 469 885 60 LEBU ERTU ON THE ROAD FROM LEBU SQUARE TO JEMO +251 114 713 360 61 LEBU-LAFTO SAMUEL BUILDING +251 114 199 061 70 62 LEGEHAR NEAR TO LAGAHAR TELE IN THE NEW BUILDING +251 115 526 5076 S.NO. BRANCHES LOCATION ADDRESS 63 LEGETAFO LEGEDADI KETEMA +251 116 679 157 64 LIDETA ALSAM CHELELEK BUILDING +251 115 533 366 65 MEDHANIT BISRATE GEBRIEL CHURCH CLOSE TO PHARMACEUTICAL FACTORY +251 113 206 222 66 MEGENAGNA METEBABER LE EDIGET BUILDING +251 116 670 063 67 MEHAL ARADA PIASSA, ARADA AVENUE +251 111 556 503 68 MERAB MERKATO MERKATO MERAB HOTEL +251 118 697 709 69 MERI-LOKE ON THE WAY TO KARA NEAR ASFAW WOSEN GROCERY +251 116 678 086 70 MERKATO MILITARY MERKATO, IN FRONT OF TANA MARKET CENTER +251 112 732 897 TERA 71 MERKATO WENBER TERA MERKATO WENBER TERA +251 112 734 619 72 MESKEL FLOWER MESKEL FLOWER ROAD +251 114 670 142 73 MESKEL SQUARE SUNSHINE CONSTRUCTION BUILDING +251 115 510 201 74 MESSALEMIA MESSALEMIA AREA +251 112 755 267 75 MICKEY LELAND IN SIDE MICKEY LELAND CONDOMINIUM COMPOUND +251 112 730 871 CONDOMINIUM 76 MILLENNIUM BOLE AROUND MILLENNIUM HALL +251 116 672 494 77 MISRAK REBEKA BUILDING +251 116 621 295 78 MOENCO MOENCO +251 116 614 531 79 OLD AIRPORT OLD AIR PORT, X-MILFOGLIE CAFÉ HOUSE +251 113 728 380 80 RAS DESTA RAS DESTA HOSPITAL +251 111 266 761 81 SEFERE SELAM ON THE ROAD FROM MESALEMIA TO KOLFE +251 112 135 671 82 SHALLA ATLAS AREA +251 118 698 003 83 SHEGER SEMEIN MAZEGAJA ON THE ROAD ADDISU GEBEYA +251 111 265 462 84 SHIROMEDA ENTOTO STREET +251 111 237 674 85 SHOLA GEBEYA NEAR SHOLA MARKET +251 116 620 738 86 SIDIST KILO ST. MARKOS CHURCH +251 111 222 606 87 SIGNAL SIGNAL +251 116 368 125 88 STADIUM STADIUM THE NEW BETHE ZATA HOSPITAL BUILDING +251 115 505 408 89 SUMMIT ON THE ROAD TO SUMMIT SOFTDRINK FACTORY +251 116 678 554 90 SUMMIT SUMMIT CONDOMINIUM COMPOUND +251 118 697 705 CONDOMINIUM 91 TANA TANA BUILDING +251 112 789 041 92 TEKLEHAIMANOT LEYLA BUILDING +251 112 767 699 93 TOR HAILOCH ON THE ROAD FROM THE ARMED FOURCE SQUARE TO KERANYO +251 113 692 609 94 URAEL URAEL AREA +251 115 549 963 95 WOLLO SEFER TEBABER BERTA BUILDING +251 115 510 988 96 YERER BER HAWETON BUILDING +251 116 459 883 97 YOSEPH YOSEPH CHURCH AREA +251 114 422 341

CITY SUB-BRANCHES S. NO. BRANCHES LOCATION ADDRESS 1 BEKLO BET GLOBAL HOTEL BUILDING +251 114 702 493 2 ASHEWA MEDA ON THE ROAD TO TATEK FROM 18 MAZORIA +251 112 601 107 3 BOLE MEDHANEALEM BOLE PAST EDNA MALL, FEW STRIDES TOWARDS BOLE-ROCK +251 116 920 131 GYMNASIUM 4 CMC MEHABE NETERE BUILDING +251 116 544 782 5 GERJI CARGO TERMINAL BOLE INTERNATIONAL AIRPORT, ON THE ROAD TO BOLE HOMES, +251 118 698 002 6 GERJI MEBRAT HAIL GERJI MEBRAT HAIL +251 116 623 657 7 HAYAHULET GETAHUN BESHAH BULDIGN +251 116 660 451 8 KARA KOTEBE COLLEGE MESALEMIA ROAD +251 116 678 824 9 KETA BURAYU BURAYU TOWN KETA AREA +251 112 604 672 10 LEGEHAR RAS HOTEL BUILDING +251 115 513 157 11 MILLINIUM FRIENDSHIP BUILDING +251 116 544 782 12 MISRAK BATA COMPLEX BLILDING +251 116 673 205 13 YERER YERER GORO/YERER HOSPITAL +251 116 677 254 14 YOSEPH SARIS ADDISU SEFER +251 114 709 727

6 UNITED BANK S.NO. BRANCHES LOCATION ADDRESS OUTLYING BRANCHES 63 LEGETAFO LEGEDADI KETEMA +251 116 679 157 64 LIDETA ALSAM CHELELEK BUILDING +251 115 533 366 S. NO. BRANCHES LOCATION ADDRESS 65 MEDHANIT BISRATE GEBRIEL CHURCH CLOSE TO PHARMACEUTICAL FACTORY +251 113 206 222 1 ABA GEDA ADAMA TOWN +251 221 112 116 66 MEGENAGNA METEBABER LE EDIGET BUILDING +251 116 670 063 2 ADAMA ADAMA TOWN, AB BUILDING +251 221 121 255 67 MEHAL ARADA PIASSA, ARADA AVENUE +251 111 556 503 3 ADIGRAT ADIGRAT TOWN +251 344 451 185 68 MERAB MERKATO MERKATO MERAB HOTEL +251 118 697 709 4 ADIHAKI MEKELLE TOWN, ADIHAKI MARKET AREA +251 342 403 110 69 MERI-LOKE ON THE WAY TO KARA NEAR ASFAW WOSEN GROCERY +251 116 678 086 5 ADWA ADWA TOWN +251 342 714 211 70 MERKATO MILITARY MERKATO, IN FRONT OF TANA MARKET CENTER +251 112 732 897 6 ALAMATA ALAMATA TOWN +251 347 740 305 TERA 7 ALLAY BEDEY DIRE DAWA TOWN, AROUND ASHEWA AREA +251 254 110 532 71 MERKATO WENBER TERA MERKATO WENBER TERA +251 112 734 619 8 ARAB SEFER-HAWASSA HAWASSA TOWN +251 462 122 630 72 MESKEL FLOWER MESKEL FLOWER ROAD +251 114 670 142 9 ARADA- SHASHEMENE SHASHEMENE, RINZAF BUILDING +251 462 114 442 73 MESKEL SQUARE SUNSHINE CONSTRUCTION BUILDING +251 115 510 201 10 ARATEGNA AKABABI HARAR TWON +251 254 662 940 74 MESSALEMIA MESSALEMIA AREA +251 112 755 267 HARAR 75 MICKEY LELAND IN SIDE MICKEY LELAND CONDOMINIUM COMPOUND +251 112 730 871 11 ARBA MINCH ARBA MINCH TOWN, +251 468 813 019 CONDOMINIUM 12 ARERTI ARERTI TOWN +251 222 230 511 76 MILLENNIUM BOLE AROUND MILLENNIUM HALL +251 116 672 494 13 ARSI NEGELE ARISI NEGELE TOWN +251 461 163 347 77 MISRAK REBEKA BUILDING +251 116 621 295 14 ASSELA ASSELA TOWN, +251 223 318 040 78 MOENCO MOENCO +251 116 614 531 15 ASSOSA ASSOSA TOWN +251 557 752 940 79 OLD AIRPORT OLD AIR PORT, X-MILFOGLIE CAFÉ HOUSE +251 113 728 380 16 ATOTE HAWASSA HAWASSA TOWN, ATOTE WARKA AREA +251 462 125 175 80 RAS DESTA RAS DESTA HOSPITAL +251 111 266 761 17 ATSE YOHANESS MEKELLE TOWN +251 344 400 761 81 SEFERE SELAM ON THE ROAD FROM MESALEMIA TO KOLFE +251 112 135 671 18 ATSE ZERAYAKOB DEBRE BERHAN TOWN, EHIL BERENDA AREA +251 116 376 430 82 SHALLA ATLAS AREA +251 118 698 003 19 AWASH 7 KILLO AWASH SEBAT KILO TOWN, +251 222 240 442 83 SHEGER SEMEIN MAZEGAJA ON THE ROAD ADDISU GEBEYA +251 111 265 462 20 AWASHO SHASHEMENE SHASHEMENE, ON THE ROAD TO BALE ROBE TOWN +251 461 100 999 84 SHIROMEDA ENTOTO STREET +251 111 237 674 21 AXUM AXUM TOWN +251 347 751 804 85 SHOLA GEBEYA NEAR SHOLA MARKET +251 116 620 738 22 BAHIR DAR BAHIR DAR TOWN +251 582 208 202 86 SIDIST KILO ST. MARKOS CHURCH +251 111 222 606 23 BALCHI BALCHI TOWN, MINJAR SHENKORA +251 228 992 382 87 SIGNAL SIGNAL +251 116 368 125 24 BALE ROBE BALE ROBE TOWN, WAKO GUTU SQUARE +251 226 653 102 88 STADIUM STADIUM THE NEW BETHE ZATA HOSPITAL BUILDING +251 115 505 408 25 BAMBASI BAMBASI TOWN, BENSHANGUL GUMUZ REGION +251 574 410 550 89 SUMMIT ON THE ROAD TO SUMMIT SOFTDRINK FACTORY +251 116 678 554 26 BATU BATU TOWN, MUNICIPALITY AREA INFRONT OF RIGHT CAFE +251 464 412 022 90 SUMMIT SUMMIT CONDOMINIUM COMPOUND +251 118 697 705 27 BERECHA ADAMA ADAMA TOWN, SODERE ROAD +251 221 125 802 CONDOMINIUM 28 BISHOFTU BISHOFTU TOWN , OPPOSITE TO BUS TERMINAL +251 114 370 733 91 TANA TANA BUILDING +251 112 789 041 29 BONGA BONGA TOWN +251 473 312 475 92 TEKLEHAIMANOT LEYLA BUILDING +251 112 767 699 30 BUNBUA WUHA DESSIE DESSIE TOWN, ON THE ROAD TO WOLDIA +251 333 127 151 93 TOR HAILOCH ON THE ROAD FROM THE ARMED FOURCE SQUARE TO KERANYO +251 113 692 609 31 BURE DAMOT BURE DAMOT TOWN +251 587 740 504 94 URAEL URAEL AREA +251 115 549 963 32 BUTAJIRA BUTAJIRA TOWN, INFRONT OF ETHIO TELECOM IN THE NEW BUILDING +251 461 15 01 60 95 WOLLO SEFER TEBABER BERTA BUILDING +251 115 510 988 33 DABARK DEBARK TOWN, NEXT TO SEMEN PARK HOTEL +251 581 170 276 96 YERER BER HAWETON BUILDING +251 116 459 883 34 DABAT DABAT TOWN +251 581 130 444 97 YOSEPH YOSEPH CHURCH AREA +251 114 422 341 35 DALLOCHA DALLOCHA TOWN IN FRONT OF THE MAIN SQUARE +251 464 660 285 36 DEBRE BERHAN DEBRE BERHAN TOWN, SILASSIE CENTER BUILDING +251 116 811 295 37 DEBRE MARKOS DEBRE MARKOS TOWN, MEHAL GEBEYA INFRONT OF BUS STATION +251 581 780 087 CITY SUB-BRANCHES 38 DEBRE TABOR DEBRE TABOR TOWN, TSEDALE BERHANU BUILDING +251 581 410 345 S. NO. BRANCHES LOCATION ADDRESS 39 DESSIE DESSIE TOWN +251 331 113 782 1 BEKLO BET GLOBAL HOTEL BUILDING +251 114 702 493 40 DILLA DILLA TOWN, INFRONT OF GINB MARKET +251 463 310 619 2 ASHEWA MEDA ON THE ROAD TO TATEK FROM 18 MAZORIA +251 112 601 107 41 DIRE DAWA DIRE DAWA TOWN +251 251 131 212 3 BOLE MEDHANEALEM BOLE PAST EDNA MALL, FEW STRIDES TOWARDS BOLE-ROCK +251 116 920 131 42 DUKEM DUKEM TOWN, BLUE NILE BUILDING +251 114 718 016 GYMNASIUM 43 EDAGA MEKELLE MEKELE TOWN +251 342 405 026 4 CMC MEHABE NETERE BUILDING +251 116 544 782 44 FASIL GONDAR TOWN, WALIYA GENERAL BUILDING +251 581 11 46 30 5 GERJI CARGO TERMINAL BOLE INTERNATIONAL AIRPORT, ON THE ROAD TO BOLE HOMES, +251 118 698 002 45 FELEGE HIWOT BAHIR DAR TOWN +251 583 208 969 6 GERJI MEBRAT HAIL GERJI MEBRAT HAIL +251 116 623 657 46 GAMBELLA GAMBELLA TOWN +251 475 51 07 37 7 HAYAHULET GETAHUN BESHAH BULDIGN +251 116 660 451 47 GISH ABAY BAHIR DAR TOWN +251 583 207 308 8 KARA KOTEBE COLLEGE MESALEMIA ROAD +251 116 678 824 48 HALABA BER SHASHEMENE TOWN, HALABA ROAD +251 462 114 250 9 KETA BURAYU BURAYU TOWN KETA AREA +251 112 604 672 SHASHEMENE 10 LEGEHAR RAS HOTEL BUILDING +251 115 513 157 49 HARAR HARAR TOWN +251 256 662 193 11 MILLINIUM FRIENDSHIP BUILDING +251 116 544 782 50 HAWASSA HAWASSA TOWN +251 462 204 326 12 MISRAK BATA COMPLEX BLILDING +251 116 673 205 51 HERMATA JIMMA JIMMA TOWN, AT HERMATA MINCH MARKET CENTER +251 472 110 422 13 YERER YERER GORO/YERER HOSPITAL +251 116 677 254 52 HOSSAENA HOSSAENA TOWN +251 465 553 730 14 YOSEPH SARIS ADDISU SEFER +251 114 709 727 53 HUMERA HUMERA TOWN, OPPOSITE ABINET HOTEL +251 342 486 052 54 JIGJIGA JIGJIGA TOWN, KAAH BUILDING +251 257 753 254 55 JIMMA JIMMA TOWN +251 471 119 080 56 KOBO KOBO TWON +251 333 341 331 57 KOMBOLCHA KOMBOLCHA TOWN, INFRONT OF THE MUNICIPALITY +251 335 510 033 58 LOGIA SEMERA LOGIA SEMERA TOWN +251 335 500 015 6 59 MARAKI GONDAR GONDAR TOWN, MARAKI AREA +251 581 114 6864 60 MEDA AGAME ADIGRAT TOWN +251 342 452 276 S. NO. BRANCHES LOCATION ADDRESS 61 MEHAL BAHIR DAR BAHIR DAR TOWN, INFRONT OF MELAT CAFÉ IN THE NEW BUILDING +251 582 220 211 62 MEHONI MEHONI TOWN +251 346 640 249 63 MEKELLE MEKELLE TOWN +251 344 415 857 64 MEKI MEKI TOWN +251 221 180 330 65 MENEHARIA HAWASSA HAWASSA TOWN, MENHARIA AREA +251 462 124 246 66 METAHARA METAHARA TOWN +251 222 261 393 67 METEMA METEMA TOWN +251 583 310 554 68 METEMA YOHANNES METEMA YOHANNES TOWN, AT ALEKA TEKLIT BUILDING +251 585 555 659 69 METTU METTU TOWN +251 471 411 912 70 MIZAN TEFERI MIZAN TEFERI TOWN +251 473 351 333 71 MODJO MODJO TOWN +251 221 160 548 72 MUGAD DESSIE DESSIE TOWN +251 333 111 058 73 NEGELE NEGELE TOWN +251 464 451 814 74 NEKEMTE NEKEMTE TOWN +251 576 618 089 75 SAGURE SAGURE TOWN +251 223 380 882 76 SHASHEMENE SHASHEMENE TOWN +251 461 100 436 77 SHEWA ROBIT SHOA ROBIT TOWN +251 336 641 410 78 SHINDI WESTERN GOJAM, SHINDI TOWN +251 584 490 764 79 SHIRARO SHIRARO TOWN +251 345 501 745 80 SHIRE SHIRE ENDASILASSIE TOWN +251 344 442 052 81 SULULTA SULULTA TOWN +251 118 695 541 82 TEWODROS GONDAR TOWN, MARKET AREA +251 581 112 359 83 TOGO CHALE TOGO CHALE TOWN, +251 258 820 062 84 WERABE WERABE TOWN +251 467 710 420 85 WOLAITA WOLAITA TOWN +251 465 515 016 86 WOLDIA WOLDIA TOWN +251 333 312 002 87 WOLKITE WOLKITE TOWN +251 113 658 527 88 WUKRO WUKRO TOWN +251 344 431 218 89 YELA SAWLA YELA SAWLA TOWN +251 467 770 448

OUTLYING SUB-BRANCHES S. NO. BRANCHES LOCATION ADDRESS 1 MODJO DRY PORT MOJO DRY PORT +251 221 161 157 2 AZEZO TEWODROS GONDAR, AZEZO +251 582 110 636 3 HAILE RESORT HAILE RESORT HAWASSA +251 462 211 761 4 KUCH KUCH TOWN +251 582 891 932 5 MENAHERIA JIMMA JIMMA TOWN, MENAHARIA AREA +251 472 115 767 6 MIZAN AMAN MIZAN TEFERI +251 473 360 535 7 NEWLAND GAMBELLA GAMBLLA UNIVERSITY AREA +251 475 512 416 8 SEMERA PORT AND THE COMPOUND OF SEMERA PORT AND TERMINAL +251 338 669 557 TERMINAL 9 YERGACHEFE YERGACHEFE TOWN +251 463 320 144