Revised 3rd Quarter Performance Report V 3_2 Adopted by BOM

DEVELOPMENT BANK OF ETHIOPIA THIRD QUARTER AND NINE MONTHS PERFORMANCE REPORT Adopted by BoM FOR THE FISCAL YEAR 2021/22 May 2022

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE OF CONTENTS Table of Contents ......................................................................................................................i List of Tables .......................................................................................................................... iii List of Figures ........................................................................................................................ iv Acronyms ................................................................................................................................. v I. Basic Facts and figures........................................................................................................ vi II. EXECUTIVE SUMMARY................................................................................................... x III. INTRODUCTION .......................................................................................................... xvi Global, Country and Industry Environmental analysis..............................................................1 1.1. Overview of the Global Economy ............................................................................................... 2 1.2. Current context of Ethiopian economy ....................................................................................... 3 1.3 Financial Sector .......................................................................................................................... 4 Performance of Strategic Reform Plan .....................................................................................5 2.1. Report of Performance of Strategic Reform ................................................................................ 6 CREDITACTIVITY& Financial PERFORMANCE ............................................................... 19 3. CREDIT ACTIVITY PERFORMANCE ..................................................................................... 20 3.1 Loan Approval .......................................................................................................................... 20 3.1.1 Loan Approval by Sector.............................................................................................................................. 20 3.1.3 Lease approval performances ..................................................................................................................... 21 3.2 Loan Disbursement................................................................................................................... 22 3.2.1 Loan Disbursement by Sector...................................................................................................................... 22 3.2.3 Lease Financing Disbursement .................................................................................................................... 23 3.3 Loan Collection ......................................................................................................................... 24 3.3.1 Loan collection performances by sector ..................................................................................................... 24 3.3.3 Lease collection performance ..................................................................................................................... 24 3.4 Loan Outstanding ..................................................................................................................... 26 3.5 Non-Performing loans............................................................................................................... 27 3.5.1 NPLs by sector and Loan Status................................................................................................................... 27 3.5.2 Lease finance Non-Performing loans .......................................................................................................... 30 3.5.3 Non-Performing loans by operating units................................................................................................... 31 3.5.4 New Entrants to NPLs .................................................................................................................................. 32 3.5.5 Re-instated Loans from Non-performing to performing loan .................................................................... 33 4. Financial Performance ................................................................................................... 36 4.1 Resource Mobilization .............................................................................................................. 36 4.1.1 Foreign Exchange ....................................................................................................................................... 36 [Development Bank of Ethiopia] Page i

Third Quarter & Nine Months Performance Report 2021/22 F.Y 4.1.2 BOND SALES ................................................................................................................................................. 37 4.1.3 BORROWING ................................................................................................................................................ 37 4.1.4 DEBIT SETTLEMENT...................................................................................................................................... 38 4.2 INCOME STATEMENT ................................................................................................................ 38 4.3 ASSET, LIABILITY AND CAPITAL .................................................................................................. 39 4.4 PRUDENTIAL INDICATORS ......................................................................................................... 40 5. EXTERNAL FUND AND CREDIT MANAGEMENT PERFORMANCE ......................................... 41 6. CAPITAL EXPENDITURE .................................................................................................... 42 7. Human Resource Management Performance ................................................................... 43 8. CORPORATE AND DEVELOPMENT AFFAIRS....................................................................... 45 8.1 Corporate Affairs ...................................................................................................................... 45 8.2 BOM......................................................................................................................................... 45 8.3 EMC ......................................................................................................................................... 46 9. Good Governance............................................................................................................ 47 9.1 Development Affairs................................................................................................................. 48 9.2 Socio-Economic Benefits ........................................................................................................... 48 9.3 Private Sector Development...................................................................................................... 48 9.4 CORPORTE Social Responsibilities ............................................................................................. 49 10. Challenges ................................................................................................................... 50 10.1 Bank Specific/ Internal/ .......................................................................................................... 50 10.2 External Challenges-stakeholder related.................................................................................. 50 11. Way Forwards.............................................................................................................. 51 [Development Bank of Ethiopia] Page ii

Third Quarter & Nine Months Performance Report 2021/22 F.Y LIST OF TABLES Table I-1 BASIC FACTS ..................................................................................................................................................... vi Table I-2: The Numbers at glance (In millions Birr) ........................................................................................................viii Table I-1: INCOME STATEMENT FOR THE THIRD QUARTER that ENDED in MARCH 31, 2022 (In ‘000 Birr) ..................xiii Table I-2: BALANCE SHEET FOR THE THIRD QUARTER ENDED MARCH, 2021/22 .........................................................xiv Table 2-0-1: STRATEGIC PILLAR 1- Policy and Business Model of the Bank ..................................................................... 7 Table 2-2: Strategic Pillar 2- Finance and sustainability .................................................................................................. 8 Table 2-3: Strategic Pillar 3- Governance and structure ............................................................................................... 10 Table 2-4: Strategic Pillar 4- Leadership and Human Resource ..................................................................................... 12 Table 2-5: Strategic Pillar 5- Loan Recovery and Accountability.................................................................................... 14 Table 2-6 ASSET and LIABILITIES MISMACH REPORT as at March 31, 2022 .................................................................. 15 Table 2-7: Strategic Pillar 6-it systems ........................................................................................................................... 16 Table 2-8: Strategic Pillar 7- Systems and working procedures ..................................................................................... 18 Table 3-1: LOAN APPROVAL PERFORMANCES AGAINST PLAN AND PAST TREND BY SECTOR (in million) ..................... 20 Table 3-2: LEASE LOAN APPROVAL BY SECTOR (in million) ............................................................................................ 21 Table 3-3: Disbursement performance against plan and past trend by Sector (In Million Birr) ..................................... 22 Table 3-4: LEASE LOAN DISBURSEMENT BY SECTOR (in million).................................................................................... 23 Table 3-3: Loan collection performances by sector (In Million Birr)............................................................................... 24 Table 3-4: LEASE LOAN COLLECTION BY SECTOR (in million) ......................................................................................... 25 Table 3-7: LOAN OUTSTANDING BY SECTOR.................................................................................................................. 26 Table 3-8: NPLS BY SECTOR AND STATUS (IN 000 BIRR) ................................................................................................ 27 Table 3-9: NPL'S STATUS BY SECTOR EXCLUDING NPLS IN TIGRAY REGION (In 000 Birr) .............................................. 29 Table 3-10: NPL performance of Lease financing by sector (in 000 birr) ....................................................................... 30 Table 3-11: NPL performance by loaning Unit (In 000 Birr) ........................................................................................... 31 Table 3-12: new entrant to NPLs during the THIRD Quarter 2021/22 (In 000 Birr) ....................................................... 32 Table 3-13: LIST OF RE-INSTATED LOANS DURING THE Third QUARTER 2021/22 ......................................................... 33 Table 4-1: Foreign exchange performance against plan for the THIRD quarter (In 000 USD) ....................................... 36 Table 4-2: Bond sales performance against plan for the THIRD quarter (In Million Birr) .............................................. 37 Table 4-3: Borrowing performance against plan for the THIRD quarter (In million Birr) ............................................... 37 Table 4-4: Debit settlement performance against plan for the THIRD quarter (In Millions of Birr) ............................... 38 Table 4-5: SUMMERY of Income Statement for PEriod ENDED MARCH, 2021/22 (In ‘000 birr) ............................. 39 Table 4-6: Summery of Income Statement Excluding Tigray region (In ‘000 birr) ........................................................ 39 Table 4-7: Summary of financial performance against plan for the THIRD quarter (IN MILLION BIRR) ........................ 39 Table 4-8: Summary of financial prudential indicator performance against AADFI’s standard..................................... 40 [Development Bank of Ethiopia] Page iii

Third Quarter & Nine Months Performance Report 2021/22 F.Y Table 4-9: Summary of CAMEL Rating as Per NBE standard.......................................................................................... 40 Table 5-1: Summary of External fund mgt. wholesale performance (In Million Birr)..................................................... 41 Table 6-1: Summary of capital expenditure performance (In ‘000 birr) ....................................................................... 42 Table 7-1: Summery of Training and development cost ................................................................................................ 43 Table 7-2:Summery of employees undertaking their education .................................................................................... 43 Table 7-3: Summary of Human Resource Management Performance........................................................................... 44 LIST OF FIGURES Figure I-1 NINE MONTH QUICK FACTS ............................................................................................................................vii Figure 3-1: Loan Approval by Sector .............................................................................................................................. 20 Figure 3-2: THIRD QUARTER LOAN DISBURSEMENT BY SECTOR.................................................................................... 22 Figure 3-3: loan collection by sector in the 3rd quarter .................................................................................................. 24 Figure 3-4: QUARTER LOAN OUTSTANDING BY SECTOR ................................................................................................ 26 Figure 3-5: npls SHARE BY SECTOR................................................................................................................................. 28 Figure 3-6: NPL's Status by Sector Excluding NPLs in Tigray Region .............................................................................. 29 Figure 3-7: SME NPLS by sector...................................................................................................................................... 30 Figure 9-1: Distribution outstanding by sector as at March 31, 2022............................................................................ 49 [Development Bank of Ethiopia] Page iv

Third Quarter & Nine Months Performance Report 2021/22 F.Y ACRONYMS AML/CFT Anti- Money Laundering/ Counter Financing Terrorism BSC Balanced Score Card BoM Board of Management CBE Commercial Bank of Ethiopia CRMD Customer Relationship Management Directorate DBE Development Bank of Ethiopia EFCMD External Fund and Credit Management Directorate EIB European Investment Bank EMC Executive Management Committee ERP Enterprise Resource Planning GERD Bond Grand Ethiopian Renaissance Dam Bond IT Information Technology LAN Local Area Network MC Manual and Custodian NBE National Bank of Ethiopia NPLs Non-Performing Loans PHLS Professional and Higher Level Services PLC Private Limited Company PRLR Project Rehabilitation & Recovery SME Small and medium Enterprises SNNPR Southern Nations, Nationalities and Peoples‟ Region SPAC Semi- Professional Administrative Clerical TS Technical Services USD United States Dollars FDI Foreign Direct Investment [Development Bank of Ethiopia] Page v

Third Quarter & Nine Months Performance Report 2021/22 F.Y I. BASIC FACTS AND FIGURES TABLE I-1 BASIC FACTS Years of operation Since 1909 Organization Structure Board of Management (BOM) (Process Based) President, Five V/Presidents 26 Directorates, 2 Offices & 2 Corporate Approval Team 12 Districts Offices, 78 Branches Stakeholders Federal & Regional Government National Bank of Ethiopia (NBE) Ministry of Finance (MOF), Public Enterprise Holding Administration Agency (PEHAA) Mission Borrowers, Public Bond Buyers, Commercial Banks etc. “The Development Bank of Ethiopia is a specialized financial institution established to promote the national development agenda through development finance and close technical support to viable projects from the priority areas of the government by mobilizing fund from domestic and foreign sources while ensuring its sustainability. The Bank earnestly believes that these highly valued objectives can best be served through continuous capacity building, customer focus and concern to the wider environment”. Vision “To be a world-class development bank that help to achieve Ethiopia‟s Economic transformation vision by 2030” Values Commitment to Mission Teamwork Learning organization Customer focus High values to Concern to the employees environment Integrity Credit Products and 1) Long-Term Loan 5) Co-Financing or Syndicate financing Services of DBE 2) Medium -Term Loan 6) Guarantee Services 3) Working Capital Loan for DBE 7) Managed Funds financed projects 4) Lease financing Priority areas of Commercial Agriculture, Agro-Processing Industries, Manufacturing, Mining the Bank & Extractive Industries and Lease financing [Development Bank of Ethiopia] Page vi

Third Quarter & Nine Months Performance Report 2021/22 F.Y FIGURE I-1 NINE MONTH QUICK FACTS 1. CREDIT & FINANCIAL OPERAION HIGHLIGHTS 1. SECTOR DISTRIBUTION OF LOAN OUTSTANDING LOALONAONUOTUSTTSATNADNIDNINGG( &P+NIP)LBTYREND 70,000,000 ECONOMIC SECTOR 60,000,000 50,000,000 14.9% 0.7% 1.4% 18.8% Agriculture 40,000,000 Loan Outstanding 0.0% Manufacturing 30,000,000 20,000,000 Non-performing 64.1% Mining & Energy 10,000,000 Loans Financial Service - Service 2021/22 2020/21 Previous Nine Nine Quarter Month Month 2. Credit Operation Performance Plan 12,000,000 Retail Actual 10,000,000 Wholesale 20,000,000 15,000,000 8,000,000 10,000,000 6,000,000 4,000,000 5,000,000 2,000,000 - - 3. Financial Results 6,000.00 140,000 5,000.00 120,000 100,000 Total Asset 4,000.00 80,000 Total 3,000.00 60,000 Liabilities 40,000 Net worth 2,000.00 20,000 1,000.00 - - Total Provisio Net Nine Month Nine Month Total Expense n Income/ Income 2021/22 2020/21 3,447.54 1,700.10 loss Nine Month 2021/22 5,600.22 3,101.53 823.66 Nine Month 2020/21 5,123.19 452.58 1,198.00 [Development Bank of Ethiopia] Page vii

Third Quarter & Nine Months TABLE I-2: THE NUMBERS AT GLANCE (IN MILLIONS BIRR) ` 3rd Quarter 2021/22 Plan Actual Pre vious 1. Credit Operation Quarte r 1.1 Loan Approval 12 Actual Retail 3 Wholesale 1.2 Loan Disbursement 4,791.3 10,014.0 3,800.1 Retail 3,519.8 8,267.9 1,658.0 Wholesale 1,271.4 1,746.1 2,142.1 1.3 Loan Collection ( P+I ) 4,567.7 3,622.1 1,312.7 Retail 3,224.2 2,008.8 Wholesale 1,343.5 1,613.3 486.2 1.4 Loan Outstanding ( P+I ) 3,729.4 3,575.0 826.4 Retail 3,465.3 2,221.5 1,208.4 Wholesale 1,353.5 1,132.7 1.5 Non - Performing Loans * 264.1 60,899.0 75.7 Retail 67,064.5 51,826.1 59,869.5 Wholesale 57,333.5 9,072.9 51,055.2 1.6 NPLs Ratio 9,731.0 20,430.4 8,814.3 Retail 11,976.6 19,580.0 20,940.9 Wholesale 11,120.0 850.00 20,130.0 Wholesale to total ouststanding ratio 808.79 Loan Portifolio Excluding Tigray Region 552.5 33.5% 35.0% 17.9% 37.8% 39.4% 1.4.1 Loan outstanding (P+I) 19.4% 9.4% 9.2% 1.5.1 Non - Performing Loans ( Excluding Tigray) 5.7% 14.9% 14.7% 1.6.1 NPLs Ratio ( Excluding Tigray) 14.5% 67,064.5 52,475.70 51,900.00 11,976.6 12,007.15 13,000 25.0% 17.9% 22.9% [Development Bank of Ethiopia]

s Performance Report 2021/22 F.Y Cumulative 2020/21 Pe rformance Change (Q I+II+III) Plan Actual Previous Year Previous Yr 10 = 11 = 12 = 3rd Qrt Cumulative 2/3 2/6 5/7 45 Actual Actual 6 7 8 = 2/1 9= 5/4 15,140.5 14,882.8 2,166.8 7,338.7 209 98 163.5 362 102.8 11,122.0 10,593.7 251.7 1,092.0 235 4,018.5 4,289.1 6,246.7 137 95 399 3,185 870 12,234.9 6,043.3 1,915.1 6,644.9 79 8,636.3 2,923.7 2,466.7 2,685.8 62 107 (18) (9) (31) 3,598.6 3,119.6 1,040.8 3,959.1 120 9,504.0 7,711.0 1,425.9 6,031.9 96 49 176 47 (9) 8,848.2 4,341.6 2,794.7 3,505.8 64 3,369.4 1,346.8 2,526.1 513 34 313 93 9 655.9 60,899.0 1,447.9 59,599.6 91 67,064.5 51,826.1 59,599.6 52,411.7 90 87 95 13 (21) 57,333.5 9,072.9 52,411.7 7,187.9 93 9,731.0 20,430.4 7,187.9 21,188.9 59 81 196 28 28 11,976.6 19,580.0 21,188.91 21,175.5 57 11,120.0 21,175.49 65 49 96 65 24 850.0 13.42 53 552.5 33.5% 13.42 35.6% 51 514 1,689 (7) 33 17.9% 37.8% 35.6% 40.4% 61 19.4% 9.4% 40.4% 0.2% 103 91 2 2 2 5.7% 14.9% 0.2% 12.1% 14.5% 12.1% 90 2 (1) (1) 93 3 26 26 59 (2) (4) (4) 57 (3) (8) (8) 65 5 6,233 6,233 53 (4) (6) (6) 51 (4) (6) (6) 61 2 4,917 4,917 103 1 24 24 67,064.45 52,475.70 78 78 1.1 11,976.57 12,007.15 100 100 (7.6) 78 78 (8.7) 17.9% 22.9% Page viii

Third Quarter & Nine Months TABLE 1-2 (CONT‟D) 3rd Quarter 2021/22 Pre vious Particulars Plan Actual Quarte r Actual 2. Financial Performance 12 2.1 Income and Expense 3 - Total Income 2,227.1 2,061.2 2,010.7 - Total Expenses 1,257.9 1,227.4 1,053.5 - Provision Expenses 1,170.2 - Net Profit/ Loss after Tax and Provision (94.0) 427.7 (213.0) Excluding Tigray 946.3 402.2 Gross profit Provision Expense 1,019.3 1,352.5 1,014.1 Net profit/loss after tax and provision (94.0) 258.7 (221.5) 2.2 Assets and Liabilities 946.3 883.6 980.4 - Total Assets - Total Liabilities 130,037.8 128,873.0 120,195.2 - Net Worth 100,556.8 96,632.2 88,316.1 - Paid up capita 29,481.0 32,240.7 31,879.1 2.3 Financial Ratio 28,500.0 28,520.0 28,520.0 - Return on Net Worth - Return on Assets 7.9% 8.3% 9.1% - Profit Margin 1.8% 2.1% 2.3% - Debt Equity Ratio 42.5% 19.5% -10.6% 2.4 Resource Mobilization 3.41 - Grand Renaissance Dam Bond-Gov't 3.0 2.8 Borrowing 540.0 152.8 136.4 - NBE Priority area loan 14,042.0 7,501.8 202.2 Local /Bond/ - - - - Foreign (World Bank) - 6,998.5 - - Foreign (China dev't Bank) 14,042.0 202.2 - Debt Settlement - 503.2 - - Time deposit withdrawal 2,794.2 - 4,299.6 3. Capital Expenditure 55.9 - 4. Manpower 311.5 2,717.2 27.5 Newly Recruited - - - Promotion 51.7 5 Termination 10 Ending Balance 10 21 16 - 2 2,231 10 9 2,242 2,239 [Development Bank of Ethiopia]

s Performance Report 2021/22 F.Y 2020/21 Cumulative Previous Year Previous Yr Pe rformance Change (Q I+II+III) 3rd Qrt Cumulative 10 = 11 = 12 = 2/3 2/6 5/7 Plan Actual Actual Actual 45 6 7 8 = 2/1 9= 5/4 6,487.0 5,600.2 1,891.1 5,123.2 92.5 86.3 2.5 9.0 9.3 1,124.3 3,101.5 97.6 87.5 16.5 9.2 11.2 3,938.7 3,447.5 (454.9) (753.4) (63.5) 330.9 106.4 99.3 823.7 42.5 19.6 (288.9) (39.7) (62.2) (225.7) 1,700.1 667.5 1,198.0 ) 2,314.9 452.6 2,598.3 2,954.9 133 114 0.33 ) (225.7) (518.6) - 275 230 2.17 120 (0.10) 2,314.9 2,786.6 93 130,037.8 128,873.0 119,020.9 119,020.9 99 99 7.2 8.3 8.3 100,556.8 96,632.2 89,032.3 89,032.3 96 96 9.4 8.5 8.5 29,481.0 32,240.7 29,988.6 29,988.6 109 109 1.1 7.5 7.5 28,500.0 28,520.0 28,520.0 28,520.0 100 100 - - - % 7.9% 8.3% 6.4% 6.4% 105 105 (9.4) 29.4 29.4 % 1.8% 2.1% 1.7% 1.7% 117 117 (9.5) 26.1 26.1 % 35.7% 8.1% 35.3% 23.4% 46 23 284.2 (44.7) (65.4) 3.4 3.0 3.0 3.0 88 88 8.2 1.0 1.0 1,260.0 371.5 523.7 1,404.9 28 29 12.0 (70.8) (73.6) 48,543.1 9,533.8 351.1 2,577.1 53.42 20 3,610 2,037 270 - - - - 4 117 6,000.0 6,998.5 - - 6 149 43 (2) 42,543.1 2,535.3 351.1 2,577.1 97.24 - - - 96 (37) 739 175 - - 324.0 3,028.5 - 8,692.6 8,341.1 55.9 58.5 16.59 20 88 39 40 37.1 65.8 55.9 - - 210 58 320 320 65 463.0 92.3 5 17 - - 111 74 (38) 11 13 48 28 31 100 100 0.5 (0.4) (0.4) - 12 9 2,252 47 35 2,252 2,239 2,242 Page ix

Third Quarter & Nine Months Performance Report 2021/22 F.Y II. EXECUTIVE SUMMARY This is 3rd Quarter and nine months progress report of DBE for the fiscal year 2021/22. It includes review of reform program implementation, credit operations, financial performance, and other support services undertaken during the reporting periods. The report further pinpoints major accomplishments, shortfalls, and challenges and suggests way forwards to address the encountered challenges. During the 3rd Quarter, in implementation of its reform program, the Bank has fully implemented media and communication unit and the BoM deliberated and approved credit and lease policies of the Bank. Besides that, selection and redeployment of management staff is carefully planned in view of transparency, fairness and consistency, and now it is at the final stage. With regard to credit operation, the Bank approved Birr 14.9 billion, disbursed Birr 6.0 billion, and collected Birr 7.7 billion during the nine months, which is 98%, 49%, and 81% of the planned targets, respectively. The major achievement is registered in the loan approval and followed by loan collection. The performance in loan approval and collection has shown 102.8% and 28% increment respectively when compared to performance results of similar period in the preceding year while loan disbursement is declined by 9%. The total loan portfolio of the Bank reached Birr 60.9 billion at the end of March 2022 and increased by 2% from the amount in the preceding quarter. The total NPLs ratio is 33.5% and declined by 4% from the previous quarter. This decrease in NPLs is attributed to the effortless commitment exerted by the management to curb the piled up NPLs through adoption of different NPLs reduction mechanisms. When loans in the Tigray Region whose monitoring is impossible to the Bank as the result of the current situation in the Region, the NPLs ratio becomes 22.9% which is consistent with the planned target. During the nine months period, DBE's collaboration with multilateral development partners was further strengthened. Its development intervention increased as a result of its external fund and credit management program. Currently, number of the programs for wholesale credit lines is increased from five to 15 and total loan portfolio reached Birr 9.07 billion by the end of the reporting period. [Development Bank of Ethiopia] Page x

Third Quarter & Nine Months Performance Report 2021/22 F.Y The Bank also mobilized financial resources from different sources during the nine months period to meet its financial need for credit operations and administration expenses. Accordingly, it mobilized USD 74.1 in total from different external funding organizations, from the NBE and from its own sources and it 62% of the planned target. The major share of the foreign currency is mobilized from the external funding organizations and followed by allocation from NBE which is USD 40 million (30% of the set budget). The Bank made payments of USD 155.6 million during the nine months mainly for purposes of projects financing and debt settlement. Other area where DBE is involved in resource mobilization is selling and administering GERD Bond. The Bank sold bond worth of Birr 371.48 million, which is 28% the planned target in the nine months. On the other hand, the Bank paid Birr 246.21 million to the GERD bond holders as redemption in the reporting period. Accordingly, the total GERD Bond outstanding balance reached Birr 11.63 billion as of March 31, 2022. In review of the financial performance, the Bank‟s total income of the past nine months is Birr 5.6 billion, which 86% of the planned target and it is grown by 9% when compared with performance in the same period of the preceding year. The Bank made a total expense of Birr 3.4 billion in the reporting period, which is 88 percent of its target. The total expense increased by 11% when compared with expenses made in same period of preceding year. In net effect, the Bank registered a net profit of Birr 452.6 million in the past nine months. The decline in net profit is attributed to huge provision held for loans with projects in the Tigray Region that entered into the NPLs category in the 2nd Quarter of 2022. However, the net profit of the nine months would have been Birr 2.9 billion if NPLs in the Tigray Region and their provision expenses are excluded. Besides its core operations, the Bank has been participating in different corporate social responsibility programs to support targeted groups of the society through its corporate social responsibility scheme. During the 3rd quarter, the Bank made promotional and financial assistance amounting to birr 13.30 million. Moreover, the Bank has also been aggressively working on its image building to improve its public image and to inform the wider society about its services and products. In terms of socio-economic development of the country, DBE financed project and lease financing projects have played significant roles in creating jobs, generating foreign currency, and increasing [Development Bank of Ethiopia] Page xi

Third Quarter & Nine Months Performance Report 2021/22 F.Y income to the Government treasury in the form of various taxes, increasing production and substituting imports. Accordingly, it is expected that 237 projects financed by the Bank in the reporting period will create job opportunities for 7,511 persons. Besides that, these projects are assumed to generate approximately Birr 183.61 million per year to the treasury in form of tax revenue when they become fully operational. These performance results are achieved through passing different existing and newly emerging challenges. Specially, the security challenges in different parts of the country particularly that in the Northern part adversely impacted whole credit and financial operations of the Bank. Limited availability of foreign currency is another challenge that hampered the loan disbursement. On top of that COVID-19 pandemic highly impacted operations of the Bank by disturbing the whole supply chain at the global level. Relatively low remuneration has also adverse impact on motivation and efficiency of the employees of the Bank. The Bank designed viable way forwards to address the encountered challenges in the short-term and in the long-term. Details of the performances results are presented in the main part of the as follows. [Development Bank of Ethiopia] Page xii

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE I-1: INCOME STATEMENT FOR THE THIRD QUARTER THAT ENDED IN MARCH 31, 2022 (IN ‘000 BIRR) [Development Bank of Ethiopia] Page xiii

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE I-2: BALANCE SHEET FOR THE THIRD QUARTER ENDED MARCH, 2021/22 In ‘000 Birr [Development Bank of Ethiopia] Page xiv

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE 1-2: BALANCE SHEET TABLE CONT’D… In ‘000 Birr [Development Bank of Ethiopia] Page xv

Third Quarter & Nine Months Performance Report 2021/22 F.Y III. INTRODUCTION This is 3rd Quarter and Nine Months performance report of the Bank for the fiscal year 2021/22 that covers the period from July 1, 2021 to March 25, 2022. The report is prepared to assess implementation of the strategic reform program, credit and financial operations, and other support services. It further attempts to highlight major accomplishments, shortfalls, and challenges, as well as the way forward to address the encountered challenges. This report is organized in three sections. The first section presents scanning of global, country and industry environment. Section two deals with performance of strategic reform implementation the last section incorporate operational and financial performances of the Bank. [Development Bank of Ethiopia] Page xvi

Third Quarter Performance Report 2021/22 F.Y SECTION ONE GLOBAL, COUNTRY AND INDUSTRY ENVIRONMENTAL ANALYSIS

Third Quarter & Nine Months Performance Report 2021/22 F.Y 1.1. OVERVIEW OF THE GLOBAL ECONOMY The global manufacturing activity has become the main driver of the recovery compensating for the weak performance of the service sector especially travel and tourism. The strong recovery has pushed up prices of commodities such as oil, base metals and agricultural products. Likewise, the global financial markets are witnessing rise in borrowing costs due to expectations of stronger future growth and rising level of inflation (World Bank Group, 2021). The global economic crisis has forced Africa‟s GDP to contract by 2.1% in 2020, the continent‟s first recession in half a century. It is estimated that about 39 million Africans could fall into extreme poverty by the end of 2021 if appropriate support is not provided, with disproportionate effects on women. Nevertheless, the global economic outlook is improving (Adesina, Dr. Akinwumi A., 2021). Economic activity in Africa was constrained in 2020 by an unprecedented global pandemic caused by COVID–19. Real GDP in Africa is projected to grow by 3.4 per cent in 2021, after contracting by 2.1% in 2020. This projected recovery from the worst recession in more than half a century will be underpinned by a resumption of tourism, a rebound in commodity prices, and the rollback of pandemic-induced restrictions. The outlook is, however, subject to great uncertainty from both external and domestic risks (World Bank Group, 2021). Although all economies in Africa have been affected by the pandemic, economies that are tourism-dependent, oil-exporting and other-resources intensive were the most significantly affected. The World Bank expects the rebound in growth in the region to be faster in agricultural commodity exporter countries including Ethiopia. Ethiopia was one of the few countries across the globe that has managed to register positive growth rate during the pandemic due mainly to stronger than expected growth in the agricultural sector (World Bank, 2021). The Ukraine-Russian war is being felt not only regionally, but around the world because of the region‟s significant contribution to food and energy supplies. In relation to food, there are production and export challenges. These are already associated with reduced availability and price rises. Food and energy import bills are already at high record levels, and it seems inevitable that these will continue to rise. This will have widespread impacts that could be far-reaching, but the consequences for poorer and vulnerable people, will be particularly severe for African countries like Somalia, Egypt, Sudan are among top 36 countries whose import of 50% of their [Development Bank of Ethiopia] Page 2

Third Quarter & Nine Months Performance Report 2021/22 F.Y wheat are dependent on Russia and Ukraine, if pre-emptive measures are not taken promptly. (Global impact of War in Ukraine on food, energy and finance system, UN, April 2022) Besides, the economic sanctions on Russia following its war on Ukraine has put global energy supplies at risk. Russia supplies around 10% of the world‟s energy, including 17% of its natural gas and 12% of its oil. The jump in oil and gas prices will add costs to industry and reduce real incomes of consumers. Considering this, Fitch Ratings has cut its world GDP growth forecast for 2022 by 0.7% to 3.5%. This reflects the drag from higher energy prices and a faster pace of US interest rate hikes than anticipated. Thus, forecast for world growth in 2023 is lowered to 2.8%. Furthermore, post-Covid-19 pandemic recovery is being hit by potentially huge global supply shock that will reduce growth and push up inflation. 1.2. CURRENT CONTEXT OF ETHIOPIAN ECONOMY The Ethiopian economy exhibited commendable performance. The Ministry of Finance reported that the economy registered 6.1% growth and per-capita income surpassed USD 1000 in 2019/20. According to the recent update from the Ministry (September 2021), the Ethiopian economy remained resilient and maintained a stable and promising path. This is despite the multiple exogenous shocks the economy faced – including the COVID-19 pandemic and the global economic downturns, the locust invasions, and the domestic security challenges in the northern part of the country (Press Secretariat Office, PMO, Ethiopia, September 2021). The update also mentions that export performance, financial sector development, and domestic revenue have shown notable growth throughout the past two years. Export earnings are growing after a decade of stagnation, reaching USD 3.6 billion this year showing a 19% increase compared to that in the previous fiscal year. Export performance was reportedly an outcome of measures taken by the government in the agriculture and mining sectors. Mining exports showed more than 1000% increase, and this was clearly a result of policy revisions that were addressed in the sector. This is a notable indication of the economy‟s turnaround. Domestic revenue has shown a notable 20% increase in the last fiscal year. All being said; most analysts are optimistic to the Ethiopian economy‟s ability to rebound strongly. Nevertheless, the Ethiopian economy faces challenges and risks that could reduce the projected growth pick-up. These include the decline in foreign direct investment, the risk of internal and external conflicts, and the persistent level of inflation. Moreover, the slow pace of COVID-19 vaccination would impede the [Development Bank of Ethiopia] Page 3

Third Quarter & Nine Months Performance Report 2021/22 F.Y service sector‟s chance of quick recovery. The uncertainty created by these factors may delay the investment decisions of both local and foreign investors. 1.3 FINANCIAL SECTOR The financial sector is also expanding and undergoing a rapid transformation with increasing digitization and financial innovation. Access to finance has shown robust growth. Financial saving has increased by 30.3% from 1 trillion to close to 1.4 trillion in June 2021. New credits reached 329.4 billion ETB from 271.2 billion ETB in EFY 2012; showing 21.5% increase. The private sector received the lion‟s share (over 70%) of the availed credit. This is reportedly a notable outcome of the reforms where the government continued to maintain prudent fiscal stance (IBID). Currently, the Ethiopian banking sector consisted of two public banks, the Commercial Bank of Ethiopia (CBE) and the Development Bank of Ethiopia (DBE); 19 private commercial banks; 35 microfinance institutions (MFIs), and more than 17 new upcoming private banks. These banks have opened 117 new bank branches during the review period thereby raising the total number of bank branches to 6,628. About 34.2% of the total bank branches were located in Addis Ababa. Of the total bank branches, the share of state-owned banks is 28.7%, and that of private banks is 71.3%. The total capital of the banking system amounted to Birr 117.2 billion, of which state-owned banks accounted for 50.9% and private banks 49.1%. The share of Commercial Bank of Ethiopia, the largest state-owned bank, was 44.3% (NBE Quarterly Bulletin , 2021, p. 14). DBE has 12 districts and 78 branches and is availing credits to development projects in the priority areas of the economy and to SMEs. The financial sector in Ethiopia has felt the exogenous shocks of the Pandemic; the effects are observed on both balance sheets and income statements of all banks. This effect is shadowed during the current year due to a good performance record all through the pre-COVID period. A recent study identified an immediate liquidity need of around Birr 17 billion for private banks so that they can comfortably meet the NBE‟s liquidity requirement. This in fact will be challenged by less resource mobilization and reduced loan collection of Birr 10 billion per quarter. Early measures to improve the liquidity, capital position, asset quality, earning, and controlling exchange losses of banks will have paramount importance for sustainable soundness of the banking system. [Development Bank of Ethiopia] Page 4

Third Quarter & Nine Months Performance Report 2021/22 F.Y SECTION TWO PERFORMANCE OF STRATEGIC REFORM PLAN [Development Bank of Ethiopia] Page 5

Third Quarter & Nine Months Performance Report 2021/22 F.Y 2.1. REPORT OF PERFORMANCE OF STRATEGIC REFORM DBE is in the mid-term of the implementation of its five-year strategic reform plan that covering the period from 2019/20 to 2024/25. The strategic plan is based on seven pillars, 27 corresponding strategic objectives; each having its own key performance indicators and targets. Responsibility for the implementation and performance of set goals has been clearly cascaded to all work units and clusters. Accordingly, a series of awareness creation meetings were held with respective work units of the Bank on the strategic plan for the sake of instilling ownership and accountability. Following strong monitoring and evaluation of the Bank‟s reform agenda by the EMC, there have been progresses in the implementation of most KPIs. The credit and financial aspects of the Reform have been greatly improved with the registration of significant reduction of NPLs and increase in profitability. The Bank needs to focus to ensure the sustainability of these achievements. As the Five-Year Strategy plan is at its mid-term of implementation, there is a need to initiate a mid-term review in order to deeply evaluate its effectiveness so far. [Development Bank of Ethiopia] Page 6

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE 2-0-1: STRATEGIC PILLAR 1- POLICY AND BUSINESS MODEL OF THE BANK Strategic Objectives (SO) Key Performance Indicators (KPI) SO 1.1 To review the Bank‟s business model and KPI 1: Approved business model by the end synchronize its products; of June 2020 SO 1.2 To review and update the credit and lease KPI 1: Revised credit and lease policy by the policy of the Bank to align it with the end of March 2020 current changes in the political and macroeconomic landscape Under this pillar, there are two strategic objectives and their performance progress is presented in detail and a comparison is made between the previous quarters as follows: SO 1.1 - To review the Bank‟s business model and synchronize its products: KPI-1 Approved business model by the end of June 2021  The Business Model of the Bank is already approved by the Board of Management. SO 1.2-Review and update the credit and lease policy of the Bank to align it with the current changes in the political and macroeconomic landscape. KPI-1 Revise credit and lease policy by the end of March 2021  The Credit and Lease Financing Policies of the Bank have been discussed and endorsed by the BOM and under final revision based on feedback, comments, and suggestion of the BoM. [Development Bank of Ethiopia] Page 7

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE 2-2: STRATEGIC PILLAR 2- FINANCE AND SUSTAINABILITY Strategic Objectives (SO) Key Performance Indicators (KPI) KPI 1: Source of funding study conducted by the end of March SO 2.1 Conduct studies to diversify funding sources of the Bank 2020 and minimize its dependency on NBE priority sector loan KPI 1: Bring NPLs down from the current 40.9% to 34% by the June 2020, 24% by June 2021; and 10% by 2022. SO 2.2 Ensure prudent lending practice in the Bank and maintain KPI 2: Complete the study on Asset Quality Review by June, 2022 quality of loans to reduce NPLs SO 2.3 Optimize the Bank‟s profit to KPI 1: Improve ROA from the current -2.19% to 1% by June ensure sustainability 2020, 1.25% by 2021, and 1.5% by June 2022. KPI 2: Improve ROE from the current -135.85% to 3.1% by the end of June 2020 To achieve the target set for strategic pillar 2, the following specific activities have been carried out and a comparison is made against the previous quarters as follows: SO 2.1- Conduct studies to diversify funding sources of the Bank and minimize its dependency on NBE priority sector loan. KPI 1: Source of funding study conducted by the end of March 2020  DBE Bond sales are fully operational and bond purchases have been started by Commercial Banks, Insurance Companies and Pension Fund Agencies as per the NBE directives. Accordingly, Birr 7 Billion is mobilized from sales of DBE bond as of March 31, 2022. SO 2.2 - Ensure prudent lending practice in the Bank and maintain quality of loans to reduce NPLs. KPI-1: Bring NPLs down from the current 40.9% to 34% by the June 2020, 26.1% by June 2021; and 10% by June 2022.  DBE planned to reduce its NPLs ratio to 17.8% by the end of the third quarter the current fiscal year. Using IFRS reporting standard, the NPLs ratio is at 33.5% at end of March 2022 at a total magnitude of Birr 20.4 billion. The NPLs ratio is reduced by 1.43% (Birr 510 million) when compared to that in the preceding quarter. However, the ratio of NPLs is reduced to 22.9% when the loans of projects in the Tigray region are excluded and it is close to the planned target. [Development Bank of Ethiopia] Page 8

Third Quarter & Nine Months Performance Report 2021/22 F.Y SO 2.3 - Optimize the Bank‟s profit to ensure sustainability KPI 1: Improve ROA from the current -2.19% to 1% by June 2020, 1.25% by 2021 and 1.5% by June 2022. KPI-1 ROA* 2.1% KPI 2: Improve ROE from the current -135.85% to 3.1% by the end of June 2020.  During the last nine months of the fiscal year, the total income earned is Birr 5.60 billion whereas total administrative expense is Birr 3.45 billion. Accordingly, there is a gross profit of Birr 2.15 billion, which is a 6.45% growth compared to that in a similar period of the previous year. Net profit of Birr 452.58 million is registered in the last nine months. The net profit is squeezed because of high provision held for loans to projects in the Tigray region. When the Tigray region projects are excluded from the statements the net profit of the nine month has become Birr 2.9 billion. Accordingly, registered KPI of ROA and ROE as of March 31, 2022 are: KPI-2 ROE* 8.3% * ROA & ROE for the quarter are calculated based on LTM (Last Twelve Months) approach. [Development Bank of Ethiopia] Page 9

Third Quarter & Nine Months Performance Report 2021/22 F.Y Table 2-3: Strategic Pillar 3- Governance and structure Strategic Objectives (SO) Key Performance Indicators (KPI) SO 3.1 Ensure proper checks and balances at KPI 1: Ensure 6 eyes principle at all levels of credit every level of credit operation operations by Sept. 2021 SO 3.2 Ensure good governance at each level KPI 1: Revised governance related policies and of governance structure including the Board directives by the end of March 2021. SO 3.3 Ensure proper and timely decision KPI 1: Customer satisfaction level of 80% by the making end of June 2021 SO 3.4 Ensure that the banks credit services KPI 1: Fully Implemented branches rationalization are fairly and efficiently accessible by the end of March 2021 The Bank‟s performance under the third strategic pillar is discussed in-depth and comparisons made against the previous quarters are depicted as follows. SO 3.1 - Ensure proper checks and balances at every level of credit operation KPI-1 Ensure 6 eyes principle at all levels of the credit operations.  All loaning units have implemented the 6 eyes principle at their loan approval and disbursement and in technical evaluations of projects to maintain proper check and balance.  Multiple layers of checking and approval systems are already in place at all loaning units. That means, credit decisions are passed through multiple steps starting from a case team in charge, a Director then to a respective Vice President and finally to the President.  In the same vein, the loan approval process passed through several checking points from the CRMD Case Team to Project Appraisal, then goes to the Review Team, and finally to the Loan Approval Committee that composed of representatives from different work units and three Vice Presidents for large scale loans.  Generally, the checks and balances are strictly maintained in every credit underwriting decision. SO 3.2 - Ensure good governance at each level of governance structure including the Board. KPI-1 Revised governance related policies and directives by the end of March 2021 [Development Bank of Ethiopia] Page 10

Third Quarter & Nine Months Performance Report 2021/22 F.Y  The Bank is subject to comply with respective governance-related directives issued by the regulatory institutions. For that, as a continuous activity, ensuring proper implementation of indicative directives is being carried out.  The AML/CFT policy is revised, discussed and approved.  BOM charter is already approved by the Board of Management and put in place.  Risk Management Program of the Bank was discussed and reviewed by the Board Risk and Finance Sub-committee and currently, it is forwarded to the BOM for approval. SO 3.3 - Ensure proper and timely decision making KPI-1: Customer satisfaction level of 80% by the end of June 2021.  Action is taken to improve customer satisfaction by establishing compliant handling, improving responsiveness, through continuous system improvement, and accountability.  The Bank plans to conduct customers‟ forums after the approval of the credit policy so as to get important feedback on its service delivery SO 3.4 - Ensure that the banks credit services are fairly and efficiently accessible. KPI-1: Fully Implemented branches rationalization by the end of March 2021.  The branch rationalization implementation is expected to be realized along with implementation of the new organizational structure of the Bank. Accordingly, there is no status change in this regard when compared to that in the 2nd quarter. [Development Bank of Ethiopia] Page 11

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE 2-4: STRATEGIC PILLAR 4- LEADERSHIP AND HUMAN RESOURCE Strategic Objectives (SO) Key Performance Indicators (KPI) SO 4.1 Ensure that operating units are managed KPI 1: Conduct Management redeployment by and lead by competent professionals the end of June 2021 KPI 1: New blood work force included in the bank SO 4.2 Enhance the capacity of staff and KPI 2: Trainings provided management through continuous capacity development works KPI 3: Exposure visit and experience sharing programs conducted SO 4.3 Ensure that the staff and management of KPI 1: Administrative and disciplinary actions the bank adhere to the policy and code of conduct taken and maintain work discipline in the Bank SO 4.4 Establish succession plan for the next 5 KPI 1: Succession plan prepared by the end of years June 2021 The specific activities carried out to achieve the targets set under strategic pillar 4 are briefly discussed and a comparison is made against the previous quarters as follows: SO 4.1- Ensure that operating units are managed and led by competent professionals. KPI-1: Conduct Management redeployment by the end of June 2021  Regarding management redeployment, the BOM has discussed the process and challenges faced through the Committee of Human Resource Affairs. The Committee had a way forward to the issue discussed.  According to the proposal presented to the BOM regarding the assignment of a new Vice President for the SME Financing Cluster, the Board discussed the issue thoroughly and approved the proposed appointment. SO 4.2- Enhance the capacity of the staff and management through continuous capacity development works KPI-1: New blood work force included in the bank (Continuous process).  During the reporting period, 21 new professionals joined the Bank and it will be continued with the implementation of the new organizational structure. KPI 2: Trainings provided (Continuous process) [Development Bank of Ethiopia] Page 12

Third Quarter & Nine Months Performance Report 2021/22 F.Y  The number of training and scope of the training in the third quarter increased and effectively delivered compared to the 2nd quarter.  During the quarter, different training programs were delivered for a total of 378 employees of the Bank (Head office 265 and Districts 113) at the Bank‟s Premises, and other training centres. These training programs specifically focused on basic and advanced Customer Services, basic and advanced Communication Skills, Team Building, and Employee Engagement and organized in collaboration with Ethiopian Airlines Aviation Academy.  In addition, leadership training programs like Ethical Leadership, Branch Management, Credit Management, HR for Non-HR Managers, and Compliance Management have been organized in collaboration with EIFS. Besides that, in collaboration with Addis Ababa Chamber of Commerce and Sectoral Associations, Leadership Training Programs such as women in leadership, team building, strategic planning, and management were also organized.  During the period, Performance Audit Training Program has been held to improve capacity of internal auditors in the specified area of finance and audit. Accordingly, Customer Accounts & Transaction Service, Communication Skill, Risk Management, Anti-Money Laundering, Basic Monetary Policy Instruments & Operations, Risk- Based Internal Audit, and Bank Accounting were implemented during the period. There were also other training programs and workshops that were carried out during the quarter to hence capacity of performers.  Besides that, 36 employees (16 from Head office and 10 from districts) are in attendance higher education with the Bank‟s sponsorship scheme. KPI 3: Exposure Visit and Experience Sharing Held (Continuous process)  There is no conducted exposure visit and experience sharing so far due to travel restrictions as the result COVID-19 pandemic. SO 4.3-Ensure that the staff and management of the bank adhere to the policy and code of conduct and maintain work discipline in the Bank. KPI 1: Administrative and disciplinary action taken (continuous process). [Development Bank of Ethiopia] Page 13

Third Quarter & Nine Months Performance Report 2021/22 F.Y  During the quarter, administration and disciplinary action has been taken on 8 employees (5 of them were given a first written warning with 12.5% one month salary penalty, 1 employee was given a first written warning and salary deduction for being absent without notifying immediate supervisor, another employee was given last written warning with 25% one month salary penalty, and the other employee was given last warning and demotion letter).  The major reasons for these disciplinary measures are failing to comply with the Bank‟s code of conduct, absence from work without permission and notifying immediate supervisors and misuse of authority and responsibility. SO 4.4 -Establish succession plan for the next five years KPI 1: Succession plan prepared by the end of June, 2021  This KPI requires full implementation of the new organizational structure and deployment of the senior management. In this regard, no change is made since the previous quarter. TABLE 2-5: STRATEGIC PILLAR 5- LOAN RECOVERY AND ACCOUNTABILITY Strategic Objectives (SO) Key Performance Indicators (KPI) KPI 1: Avoid Asset/ Liability maturity mismatch SO 5.1 Improve the loan collection capacity of the Bank SO 5.2 Enhance the asset disposal KPI 1: Collection from disposal to be increased by performance of the Bank 40% in 2020/21 F.Y. SO 5.3 Improve the working methods KPI 1: 50% of projects under rehabilitation will be and performance of PRLR functions uplifted to performing ones by the end of June 2021 SO 5.4 Insure the proper compliance to KPI 1: Number of actions taken based on audit internal policies and procedures and findings prevail law enforcement The following specific activities were undertaken with regard to this strategic pillar to meet its target in comparison made against the previous quarter as follows. SO 5.1-Improve the Loan collection capacity of the Bank KPI 1: Avoid Asset/ Liability maturity mismatch [Development Bank of Ethiopia] Page 14

Third Quarter & Nine Months Performance Report 2021/22 F.Y Table 2-6 ASSET and LIABILITIES MISMACH REPORT as at March 31, 2022 (in Millions of Birr) 2021/22 2020/21 March 31, 2022 December 31, 2021 March 31, 2021 Code Less than 1-3 over 3 Less than 1-3 over 3 Less than 1-3 over One (1) years Years One (1) years Years One (1) years 3 Years Total Total Total year year year 1 ASSETS 1.1 On balance sheet 37,227 51,664 39,445 128,335 28,839 47,447 43,232 119,517 31,235 44,072 42,485 117,793 1.2 Off balance Sheet 38 - - 38 22 9 31 14 -- 14 1.3 TOTAL ASSETS 37,264 51,664 39,445 128,373 28,861 47,456 43,232 119,549 31,249 44,072 42,485 117,807 2 LIABILITIES 2.1 On balance sheet 22,980 53,669 19,368 96,017 18,664 49,940 18,875 87,478 20,792 43,914 24,178 88,884 2.2 Off balance sheet 17,889 4,386 - 22,276 14,378 19 2,545 16,942 11,737 3,491 - 15,228 2.3 TOTAL LIABILITIES 40,869 58,055 19,368 118,292 33,042 49,959 21,419 104,420 32,529 47,405 24,178 104,112 2.4 NET Mismatch (1.3-2.3) -3,605 -6,391 20,077 10,081 -4,181 -2,503 21,812 15,129 -1,280 -3,333 18,307 13,694 2.5 Cumulative Mismatch -3,605 -9,996 10,081 -4,181 -6,684 15,129 -1,280 -4,613 13,694  Asset liability mismatch table here in above shows that net asset liability mismatch have increased for previous year and previous quarter for short term and medium term maturity; while there is no mismatch for long term maturity of liability. SO 5.2 - Enhance the asset disposal performance of the Bank KPI 1: -Collection from disposal to be increased by 40% in 2020/21 F.Y.  During the quarter, a total amount of Birr 2,139,970.40 was collected from disposal of acquired assets. However, compared with performance in the previous quarter of 32 million, the performance of the current quarter shows a lower amount of collection from asset disposal. SO 5.3- Improve the working methods and performance of the project rehabilitation functions. KPI 1: 50% of projects under rehabilitation will be uplifted to performing ones by the end of June 2021.  In the 3rd Quarter, a total of 70 projects with total outstanding loan balance of Birr 587,212,534.78 are uplifted to performing loans. Projects rehabilitation units of the Bank (head office and districts) have worked tirelessly to achieve the desired objective of uplifting sick and stressed projects using different rehabilitation mechanisms. SO 5.4 - Insure proper compliance to internal policies and procedures and prevail law enforcement KPI 1: Number of actions taken based on audit findings. Page 15 [Development Bank of Ethiopia]

Third Quarter & Nine Months Performance Report 2021/22 F.Y  In the quarter period, there have been 9 operational audit findings given to 2 working units, 50 financial findings for 5 working units, 18 legal audits for two working units and 4 IT audit findings. Accordingly, the number of actions taken for operational audits shows that four findings are implemented out of the 9 and the remaining are pending for implementation. On the financial audit findings, 41 are fully implemented, 3 implemented partially and 6 not implemented to date. In a similar vein, for the legal audit findings, 5 are fully implemented, 8 partially implemented and 6not implemented. Of the 4 IT audit findings, three were partially implemented and one finding is not implemented. TABLE 2-7: STRATEGIC PILLAR 6-IT SYSTEMS Strategic Objectives (SO) Key Performance Indicators (KPI) SO 6.1 To enhance the core banking system KPI 1: Upgraded and updated core banking of the Bank system by the end of budget year. SO 6.2 Enable the Bank use appropriate technology for data management and report KPI 1: Fully implemented and functional preparation reporting system (ERP) by the end of SO 6.3 Facilitate the Bank‟s operation by June 2021 using electronic data exchange and transaction management KPI 1: Fully networked branches by the end of SO 6.4 Ensure that the bank‟s information Sept. 2019 technology systems are secured and protected KPI 1: IT security system installed by the end of SO 6.5 Enhance the credit process through the Dec. 2020 use of information technology software KPI 2: Disaster recovery site established by the end of 2022 KPI 1: Applications installed by the end of Jan 2021 The bank has undertaken the following specific activities under this strategic pillar and a comparison is made against the previous quarters: SO 6.1 -Core Banking system (T-24) upgrading and updating KPI 1: Upgraded and updated core banking system by the end of the budget year.  It is completed and the Bank is using the upgraded core banking of 2018 version. SO 6.2 -Enable the Bank use appropriate technology for data management and report preparation KPI 1: Fully implemented and functional reporting system (ERP) by the end of June 2021. [Development Bank of Ethiopia] Page 16

Third Quarter & Nine Months Performance Report 2021/22 F.Y  Implementation of the ERP is completed in October 2021 and project office presented its project exit report on October 22, 2021.  Currently, the project office is engaged in regular ERP systems administration and support services with 6-technical staff and 1 business staff. SO 6.3 -Facilitate the Bank's operation by using electronic data exchange and transaction management. KPI 1: Fully networked branches by the end of Sept. 2019  All branches of the Bank are networked with the core banking system. SO 6.4 -Ensure that the bank's information technology systems are secured and protected. KPI 1: IT Security system installed by the end of Dec. 2020  Completed KPI 2: Disaster recovery site established by the end of 2022  A proposal is delivered to the management on March 31, 2022. There is some progress on finalizing the proposal and submission of the document to EMC from the previous quarter. SO 6.5 -Enhance the credit process through the use of information technology software KPI 1: Applications installed by the end of January 2021  TOR for Loan Origination and Document Management System is sent to EMC for deliberation.  Procurement of COMFAR software for project appraisal analysis and other applications are waiting for implementation of the new organizational structure and deployment of management staff. [Development Bank of Ethiopia] Page 17

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE 2-8: STRATEGIC PILLAR 7- SYSTEMS AND WORKING PROCEDURES Strategic Objectives (SO) Key Performance Indicators (KPI) SO 7.1 Enhance the Bank‟s risk management KPI 1: Implemented risk grading and customer system classification by the end of Sept. SO 7.2 Strengthen the Monitoring and 2020 Evaluation system KPI 1: Revised performance management system by the end of March 2021 SO 7.3 Revise the credit and lease financing KPI 1: Revised credit procedure by the end of procedure March 2021 SO 7.4 Establish appropriate communication KPI 1: Prepared and approved communication and image building strategies strategy and information disclosure policy by the end of March 2021 The Bank has undertaken the following specific activities with regard to this strategic pillar in the reporting period and a comparison is made against the previous quarters as follows. SO 7.1-Enhance the Bank‟s Risk Management System KPI 1: Implemented risk grading and customer classification by the end of Sept. 2021  Risk Grading and Customer Classification guideline is finalized and submitted for review and approval. SO 7.2-Strengthen the Monitoring and Evaluation system KPI 1: Revised performance management system by the end of March 2021  BSC performance measure is fully implemented and performance evaluation of last year and that of the past three quarters is measured/evaluated using the BSC system. SO 7.3- Revise the Credit and Lease financing Procedure KPI 1: - Revised credit and lease procedure manuals by the end of March 2021  Credit and lease financing procedure manuals are revised based on the revised credit and lease financing policies and ready for approval as soon as the policies are approved. SO 7.4 - Establish appropriate Communication and image building strategies KPI 1: - The Bank‟s communication strategy has been prepared and approved for information disclosure policy by the end of March 2021.  Media and Communication Directorate.is established as a new working unit and staffed with the required management and manpower. [Development Bank of Ethiopia] Page 18

Third Quarter & Nine Months Performance Report 2021/22 F.Y SECTION THREE CREDITACTIVITY& FINANCIAL PERFORMANCE [Development Bank of Ethiopia] Page 19

Third Quarter & Nine Months Performance Report 2021/22 F.Y 3. CREDIT ACTIVITY PERFORMANCE 3.1 LOAN APPROVAL 3.1.1 LOAN APPROVAL BY SECTOR In the third quarter, 237 financing requests worth Birr 10.0 billion were approved which is 209% of the planned target. When compared to the previous quarter‟s performance, this quarter‟s approval is increased by more than 163.5%. Moreover, the quarter performance is higher than the performance of the same quarter in the previous year. The nine months performance report also shows that the Bank achieved 98.3% of its approval target by approving Birr 14.9 billion in total. When compared to previous year‟s nine months performance, the current performance is almost doubled. TABLE 3-1: LOAN APPROVAL PERFORMANCES AGAINST PLAN AND PAST TREND BY SECTOR (IN MILLION) During the quarter, the manufacturing sector is the major contributor to the high accomplishment of loan approval. In general, although the Bank has achieved more than its planned 0.2% Agriculture target, there is low achievements in the 17.4% 0.02% 3.1% Manufacturing agriculture, the mining and energy sectors. 0.7% Mining & Energy As per loaning units, the low achievement in Financial Service loan approval for agricultural projects might 78.5% Service be in part associated with occurrence of Consumer drought stress and other related problems in southern and eastern parts of the country. [Development Bank of Ethiopia] Figure 3-1: Loan Approval by Sector Page 20

Third Quarter & Nine Months Performance Report 2021/22 F.Y According to the pie chart graph, loans approved in the reporting period indicated that the 78.5% of the total loan approval in the Bank is the share of the manufacturing sector. The remaining portion is shares of Financial Service, Agriculture, Mining & Energy, Consumer and Services with 17.4%, 3.1%, 0.7%, 0.2% and 0.02% share of the total loan approved amount, respectively. 3.1.3 LEASE APPROVAL PERFORMANCES In the third quarter, it was planned to approve Birr 1.54 billion for lease financing, but only Birr 280.4 million was approved. It is found that the quarter lease financing approval is lower compared to its planned target as well as the performance in the previous quarter even though it shows increment when compared to performance in last year‟s same quarter. The Bank has approved Birr 784.9 million in lease financing in the last nine months, which is only 18% of the target. The reason for the low lease financing performance in the given period is associated with the reduction in the flow of loan applicants despite provision of technical support and trainings by the Bank for existing customers and potential SMEs. Table 3-2: LEASE LOAN APPROVAL BY SECTOR (in million) 2021/22 2020/21 Pre vious 3rd Quarter Quarte r Annual 3rd Quarter Nine Month Pe rformance Percentage Change (Q I+II+III) Cumulative Particulars Actual Plan Actual Plan Actual 3 45 Actual Actual 8= 9 = 10 = 11 = 12 = Agriculture 1 2 2/1 5/4 (2-3)/3 (2-6)/6 (5-7)/7 Manufacturing 78.5 67 Mining & Energy 683.4 76.4 334.8 11 8- 3 934 689 Service 709.9 177.0 2,159.5 164.8 7.4 20.9 25 24 - 47 468 167 149.5 26.1 0.1 2,243.4 545.7 31.2 204.6 17 13 48,428 32 - 7 Total 6.4 60.8 19.8 65.3 107 3,221 - 0.8 419.7 472.4 13.6 0.4 0.4 18 - 377 169 1,542.8 280.4 - 785.0 58.8 291.3 16 - 33 4,875.2 Challenges observed in specific Loan Approval  Failure of customers to meet set pre-conditions in loan approval such as equity blocking, pledging external collateral for those projects whose fixed asset is estimated below 100% collateral coverage. This failure of customers restricted approval of loan proposal amounting to Birr 400 million.  Political instability, lack of production area/shades for lease projects, unwillingness of the promoter to continue the loan process resulted in failing to complete the KYC on time. [Development Bank of Ethiopia] Page 21

Third Quarter & Nine Months Performance Report 2021/22 F.Y  Even though most of the SMEs attended the Bank‟s training program, lease financing customers were failing to meet the requirements and conditions of the Bank.  Lack of cooperation by stakeholders that are responsible to support enterprises in facilitating infrastructure (electric power and shades), and documentation (forming enterprises under the commercial code of the country) were observed in the given reporting period. 3.2 LOAN DISBURSEMENT 3.2.1 LOAN DISBURSEMENT BY SECTOR In the third quarter, total loan disbursement was Birr 3.6 billion, which is a 79% of the plan target. Moreover, the performance in loan disbursement of this quarter is about three times that of the previous quarter (quarter II). TABLE 3-3: DISBURSEMENT PERFORMANCE AGAINST PLAN AND PAST TREND BY SECTOR (In Million Birr) FIGURE 3-2: THIRD QUARTER LOAN DISBURSEMENT BY SECTOR The Bank has disbursed 49.3% of Third Quarter Loan Disbursement by its target in the last nine months of the fiscal year. The loan Sector Agriculture disbursement performance fell by Manufacturing close to 10% when compared to 0.5% 0.3% 3.6% performance in the same period last year. Viewing the share of the 44.5% Mining & Energy Financial Service [Development Bank of Ethiopia] 49.2% Service 1.9% Consumer Page 22

Third Quarter & Nine Months Performance Report 2021/22 F.Y total disbursement across the sectors in the 3rd Quarter (see the pie chart), still, the manufacturing sector consumes the lion‟s share (49.2%) followed by disbursement made to the financial service (44.5%) which is allocated to MFIs and commercial banks as wholesales. Of all the sectors, the share of financing for agricultural projects is the lowest, with only 3.6% in the 3rd Quarter and around 4% in the nine months of the fiscal year. Moreover, out of the total loan disbursement in the nine months, the share of the financial service is around 52% followed by the manufacturing sector which constitutes close to 40% of the total loan disbursed by the Bank in the period. 3.2.3 LEASE FINANCING DISBURSEMENT As shown in the table below, DBE had planned to increase its total lease financing disbursement by Birr 1.47 billion in the third quarter, but its actual performance was Birr 289.6 million, which is 20% of the target. With the exception of Adama District, all districts have performed poorly in lease financing disbursement. Despite there is a shortfall of the actual performance against the planned target, this quarter‟s performance is significantly higher when compared to performance in the previous quarter and last year‟s similar quarter. The Bank had planned to disburse Birr 3.9 billion for lease financing in the last nine months, but it has implemented disbursement of only Birr 507.3 million. This performance is almost similar to the performance in same period of last year. Table 3-4: LEASE LOAN DISBURSEMENT BY SECTOR (in million) 2021/22 2020/21 Pre vious 3rd Quarter Quarte r Annual 3rd Quarter Nine Month Performance Percentage Change (Q I+II+III) Cumulative Particulars Actual Plan Actual Plan Actual 3 45 Actual Actual 8 = 9 = 10 = 11 = 12 = Agriculture 1 2 Manufacturing 93.9 67 2/1 5/4 (2-3)/3 (2-6)/6 (5-7)/7 Mining & Energy 569.3 86.8 71.7 Service 814.1 178.6 17.4 1,525.0 181.4 21.2 79.5 15 12 - 8 309 128 85.1 12.2 - 2,180.6 283.3 45.7 333.3 Total 12.0 183.1 30.4 0.3 101.1 22 13 149 290 - 15 2.2 289.6 228.0 12.1 0.4 1,470.8 6.0 507.3 67.7 0.4 14 13 - 30 4,208 - 70 514.3 3,939.6 535 201 - 2,832 2,848 20 13 58 328 - 1 Reason for Underachievement in Loan Disbursement  Fail to meet required terms and conditions;  Lack of raw materials due to the security problems in the western part of Ethiopia (the major source of raw materials) for commissioning and disburse working capital loan.  Price surge of investment item after loan approval: [Development Bank of Ethiopia] Page 23

Third Quarter & Nine Months Performance Report 2021/22 F.Y  Dessie and Mekelle Districts had a plan of disbursing loan amounting Birr 388 in the third quarter but not realised due to the instability in the northern part of the country.  Delay in procurement of machinery after making a 20% equity blocking in case of lease financing. 3.3 LOAN COLLECTION 3.3.1 LOAN COLLECTION PERFORMANCES BY SECTOR TABLE 3-5: LOAN COLLECTION PERFORMANCES BY SECTOR (In Million Birr) As shown in the Table 3-8 above, loan collection of Birr 3.6 billion was materialized during the third quarter and it is achievement of 96% of target. Birr 7.7 billion is collected in the past nine months and it is 81% of the planned target. When compared to the previous quarter, performance in this quarter is three fold of the performance in the same quarter of the previous year. FIGURE 3-3: LOAN COLLECTION BY Third Quarter Loan Collection by Sector SECTOR IN THE 3RD QUARTER 1.2% Figure 3-3 shows sector- specific loan collection performance, 1.2% 8.5% indicating that manufacturing sector is leading with 48.1% Agriculture followed by financial service with 37.9% of the share of the total loan 37.9% Manufacturing collection. Agriculture, mining and Mining & Energy service sectors have a share of 48.1% Financial Service 8.5%, 3.1% and 1.2% respectively of the total loan collection. Service 3.1% Consumer 3.3.3 LEASE COLLECTION PERFORMANCE The Bank planned to collect Birr 901 million from lease financing and collected Birr 366.9 million, which is 41% of the target. During the quarter, loan collection performances of most of [Development Bank of Ethiopia] Page 24

Third Quarter & Nine Months Performance Report 2021/22 F.Y districts fell short of the target. However, the overall loan collection performance of the Bank is higher than that in the previous quarter and in the preceding year same quarter. Table 3-6: LEASE LOAN COLLECTION BY SECTOR (in million) 3rd Quarter 2021/22 Annual 2020/21Nine Performance Percentage Change Pre vious (Q I+II+III) 3rd Month Particulars Plan Actual Quarte r Plan Actual Quarter Cumulativ 8 = 9 = 10 = 11 = 12 = 1 2 45 Actual Actual (2- (2-6)/6 (5-7)/7 Agriculture Actual 67 2/1 5/4 3)/3 Manufacturing 211.5 51.2 3 Mining & Energy 651.0 253.2 538.3 125.6 39.6 98.3 24 23 18 29 28 Service 25.5 54.9 43.5 1,656.6 597.4 123.6 416.4 12.9 165.2 137.3 45.8 112.7 39 36 53 105 43 Total 901.0 7.5 62.0 65.0 17.0 14.0 366.9 32.9 877.2 4.9 641.4 215 211 - 11 20 22 4.6 2,292.7 213.8 275.2 - 54 21 41 38 33 72 37 Reason for Underachievement of Loan Collection  The majority of the projects that are found in the northern part the country stopped production.  Difficulty to access and conduct full-fledged follow-up on projects found in Benishangul Gumuz Regional State due to security problem so as to evaluate the assets to take legal actions in time on defaulted 57 agricultural projects.  Tight grace period: during appraisal, grace period given for manufacturing is not more than a year. But the construction activity and foreign currency approval for procurement of planned investment items will take more than a year. Thus, their repayment will be disrupted. [Development Bank of Ethiopia] Page 25

Third Quarter & Nine Months Performance Report 2021/22 F.Y 3.4 LOAN OUTSTANDING Loan outstanding plan at end of the third quarter was Birr 67.06 billion and the achievement shows Birr 60.89 billion, which is 91% of the target. From the table below, performance in service sector shows beyond the target whereas that of mining & energy sector needs more effort to perform as per the plan. The remaining sectors are performing close to the planned target. TABLE 3-7: LOAN OUTSTANDING BY SECTOR In 000 Birr 3rd Quarter Previous Quarter Per. change (3) (%) 5= (2-3)/3 Sector Plan (1) Actual (2) 4=2/1 13,044,268.00 Agriculture 12,618,534.28 11,446,621.04 36,675,207.00 91% -12% Manufacturing 43,125,190.31 39,059,259.50 Mining & Energy 8,814,303.00 91% 7% Financial Service 288,127.14 13,195.41 450,878.00 Service 9,730,960.78 9,072,874.25 884,865.00 5% 0% Staff Loan 379,143.63 429,829.56 59,869,521.00 93% 3% Total 922,493.86 877,206.36 67,064,450.00 60,898,986.12 113% -5% 95% -1% 91% 2% FIGURE 3-4: QUARTER LOAN OUTSTANDING BY SECTOR LOAN OUTSTANDING ( P+I ) BY ECONOMIC SECTOR 14.9% 0.7% 1.4% Agriculture 0.0% 18.8% Manufacturing Mining & Energy 64.1% Financial Service Service Consumer The portfolio concentrations of projects in the agriculture sector have shown only 18.8% whereas that of the manufacturing sector has got the lion‟s share of 64.1% of the total loan portfolio. The table below indicates the loan outstanding information in operating units. The data indicated that close to 70% of the portfolio has been administered at the Head office. Among the districts, Gambella, Mekele, and Bahir Dar Districts are ranked at the top in terms of holding higher loan outstanding. [Development Bank of Ethiopia] Page 26

Third Quarter & Nine Months Performance Report 2021/22 F.Y 3.5 NON-PERFORMING LOANS The Bank planned to minimize NPLs ratio to 17.9% by the end of the third quarter. The actual performance of the NPLs concentration at the end of the quarter is found to be 33.55%, which is 53% of the target. However, the quarter‟s NPLs are reduced by 4% from its level in the previous year of the same quarter. If projects in the Tigray region had not been affected by the war, the Bank's NPLs could have been significantly reduced as per the plan. TABLE 3-8: NPLS BY SECTOR AND STATUS AND PAST PERFORMANCE TREND (IN 000 BIRR) In million Birr 2021/22 2020/21 change 3rd Quarter Sector 3rd Quarter 2nd Quarter 3 Agriculture 12 9,858 4=(1-2)/2 5=(1-3)/3 Manufacturing 10,696 Mining & Energy 9,715 9,943 488 -2% -1% Service 129 Financial service 9,301 9,600 13 -3% -13% Consumer 5 Total 463 473 21,189 -2% -5% 92 108 -15% -29% 855 809 6% 6269% 58 -39% 3% 20,430 20,941 -2% -4% 3.5.1 NPLS BY SECTOR AND LOAN STATUS TABLE 3-9: NPLS BY SECTOR AND STATUS (IN 000 BIRR) Sector Sub standard Doubtful Loss Total % Share Agriculture 1,093,823.43 1,035,180.64 7,585,826.85 9,714,831.00 47.55% Manufacturing 3,710,379.43 3,114,761.93 2,475,831.54 9,300,972.90 45.53% Mining & Energy 127,597.16 2.27% Service 15,666.00 80,230.84 255,639.21 463,467.21 0.45% Financial service 490,590 9,524.62 66,452.81 91,643.42 4.18% Consumer 2,832.71 360,942 854,768.22 0.02% 36.15 3,237 4,749.10 Total 5,440,888 1,880.24 100% % Share 26.63% 4,600,676 20,430,432.00 22.52% 10,388,867 100.00% 50.85% The above table shows the sectoral distribution of NPLs on the basis of loan status. In total, loans classified projects under the NPLs category is amounting to Birr 20.43 billion. The agriculture sector takes the leading position from the Bank‟s total NPLs accounting for 47.55% followed by [Development Bank of Ethiopia] Page 27

Third Quarter & Nine Months Performance Report 2021/22 F.Y the manufacturing sector with 45.53%, which together account for more than 93.08% of the total NPLs position of the Bank. FIGURE 3-5: NPLS SHARE BY SECTOR On the other hand, when reviewed by NPLs share by Sector category of NPLs; 50.85% of the loans are categorized under loss 0.52% 3.86% 0.04% status, 22.52% in the doubtful and 2.26% 26.63% are in the substandard status. The size of NPLs under the loss 47.48% Agriculture category is continually increasing. As Manufacturing one of the Bank‟s key strategic focus 45.85% Mining & Energy is to reduce NPLs, the responsible Service work units are expected to design Financial service effective and workable strategies to Staff Loan reduce their NPLs. [Development Bank of Ethiopia] Page 28

Third Quarter & Nine Months Performance Report 2021/22 F.Y TABLE 3-10: NPL'S STATUS BY SECTOR EXCLUDING NPLS IN TIGRAY REGION (In 000 Birr) Sector Sub standard Doubtful loss Total % share Agriculture 984,810.68 800,484.47 7,266,071.37 9,051,366.52 75.38% Manufacturing 574,243.49 968,820.62 1,101,939.75 2,645,003.86 22.03% Mining & Energy 62,988.41 1.95% Service 15,666.00 77,215.04 93,480.37 233,683.83 0.42% Financial Service 12,314.42 9,524.62 25,383.17 50,573.79 0.18% Consumer 2,809.52 8,147.58 1,349.38 21,811.38 0.04% 1,652,832.52 1,880.24 4,708.10 100% Total 13.77% 18.34 8,490,104.29 12,007,147.48 % Share 1,864,210.67 70.71% 100.00% 15.53% According to the table above, Tigray accounts for close to 72% of the manufacturing projects that fell under the NPLs category. The NPLs significantly decreased in terms of magnitude from Birr 21 billion during the same quarter of the last year to Birr 12 billion when loan with projects in Tigray region is excluded. Thus, the ratio of NPLs excluding loan with projects in the Tigray region is 22.9%. Besides that, the NPLs amount is decreased from Birr 20.9 billion during the second quarter to Birr 20.4 billion in the third quarter when loans in Tigray region are included. FIGURE 3-6: NPL'S STATUS BY SECTOR EXCLUDING NPLS IN TIGRAY REGION NPL's Status by Sector Excluding NPLs in Tigray Region 1.95% 0.42% 0.18% 0.04% Agriculture 22.03% Manufacturing Mining & Energy 75.38% Service Financial Service Consumer [Development Bank of Ethiopia] Page 29

Third Quarter & Nine Months Performance Report 2021/22 F.Y 3.5.2 LEASE FINANCE NON-PERFORMING LOANS TABLE 3-11: NPL PERFORMANCE OF LEASE FINANCING BY SECTOR (IN 000 BIRR) NPL of Lease projects is decreased to Birr 284.59 million as of March 25, 2022, from Birr 1,772.35 million of the previous quarter. This indicates that there is a decrease of non- performing loans from second quarter to third quarter. However, if NPLs in Tigray regions are excluded the NPLs ratio become 15.2%, which indicates significant numbers of NPLs of lease finance are registered by the region. FIGURE 3-7: SME NPLS BY SECTOR From the table 3-15 compared with NPLs of SME by sector the second quarter report status, the amount of lease financing NPLs 3% registered in the agriculture, manufacturing, mining and service 8% sectors decreased by 11.07%, 18.67%, 11.26% and 9.12% 23% Agriculture respectively. Currently, 21 lease 66% Manufacturing projects with a total loan portfolio of Mining & Energy Birr 130.73 million are under NPLs Service status. Meanwhile, 48 projects with amount of Birr 317.15 million are reinstated from NPLs. Therefore, special focus should be given to NPLs resolution strategy to reduce the existing NPLs of lease projects, and timely intervention to project with loans under the watch list to properly prevent the NPLs increment. The majority of NPLs of SME financing lies on manufacturing sector with NPLs amount of Birr 0.95 billion (66%) followed by mining and energy sector (23%), and agriculture sector with 8%. [Development Bank of Ethiopia] Page 30

Third Quarter & Nine Months Pe 3.5.3 NON-PERFORMING LOANS BY OPERATING UNITS Table 3-12: NPL performance by loaning Unit (In 000 Birr) [Development Bank of Ethiopia]