National Bank of Ethiopia

Financial Statements

For the year ended 30 June 2024

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Contents	Page
Statement of Director’s Responsibility	1
Independent Auditor’s Report	2 – 8
Statement of Profit or Loss and Other Comprehensive Income	9
Statement of Financial Position	10
Statement of Changes in Equity	11
Statement of Cash Flows	12
Notes to the Financial Statements	13 – 117

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National Bank of Ethiopia

Annual Financial Statements

For the year ended 30 June 2024

Statement of Director’s Responsibility

The Directors are responsible for the preparation and fair presentation of the financial statements of National Bank of Ethiopia (“The Bank”), comprising the statement of financial position as at 30 June 2024, statements of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards.

To enable the Directors, meet those responsibilities, the Board of Directors (the "Board") and management sets standards and management implements systems of internal control, accounting and information systems aimed at providing reasonable assurance that assets are safeguarded, and the risk of error, fraud or loss is reduced in a cost-effective manner. These controls, contained in established policies and procedures, include the proper delegation of responsibilities and authorities within a clearly defined framework, effective accounting procedures and adequate segregation of duties.

To their best knowledge and belief, based on the above, the Directors are satisfied that no material breakdown in the operation of the systems of internal control and procedures has occurred during the year under review. The Directors have reviewed the performance and financial position of the Bank to the date of signing of these financial statements and its prospects based on prepared budgets and are satisfied that the Bank is a going concern and, therefore, have adopted the going concern assumption in the preparation of these financial statements.

Approval of the annual financial statements

The financial statements on pages 9 to 117 were approved by the Governor on behalf of the Board of Directors on 12 June 2025.

Signed on behalf of the Directors

H.E. Mamo Esmelealem Mihretu .................................................... Date: 12 June 2025 Mamo Esmelealem Mihretu Governor

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INDEPENDENT AUDITOR’S REPORT

TO THE BOARD OF DIRECTORS OF THE NATIONAL BANK OF ETHIOPIA

Report on the Audit of the Financial Statements

Audit Opinion

We have audited the financial statements of The National Bank of Ethiopia, which comprise the statement of financial position as at 30 June 2024, and the related statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as at 30 June 2024, and its financial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standard (IFRSs) and the requirement of the Pronouncements on the application of International Accounting Standards (IAS 29), Financial reporting in Hyperinflationary Economies in Ethiopia by the Accounting and Auditing Board of Ethiopia.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the financial statements section of our report. We are independent of the Bank in accordance with the requirements of the International Ethics Standards Board for Accountants (IESBA), International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA code) and other independence requirements applicable to performing audits of financial statements in Ethiopia. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and other ethical requirements that are relevant to our audit of financial statements in Ethiopia. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matter to be communicated in our report.

Key audit matter	How the matter was addressed in the audit
1. Impairment of financial assets	We conducted the following procedures on the Expected Credit Loss (ECL) for these financial instruments:
As discussed under Note 9 of the financial statements, the National Bank of Ethiopia extends various loans to private commercial banks, government banks, and the Government of Ethiopia, summarized as follows:	• We assessed the design and tested the implementation of key controls related to the calculation of impairment losses.
Loan to government banks: 134,953,595,130	• We observed that the initial financial model was developed by third-party IFRS experts with the requisite experience. Subsequently, this model has been adapted by internal resources for the current reporting period, taking into account relevant factors that may impact its accuracy and reliability.
Loans to private commercial banks: 13,210,129,051
Due from Government of Ethiopia: 687,897,177,830	• In evaluating the control design, we examined its suitability considering the nature and significance of the risk, the competence and authority of the individuals executing the control, and the frequency and consistency of its application.
Total: 836,060,902,011
The Bank conducted an impairment assessment of these assets as of 30 June 2024, and 30 June 2023. A provision of Birr 5,456,148,892 has been recognized for these balances, reflecting an increase from Birr 4,768,090,699 in 2023, which corresponds to a rise of 14.4%. This provision represents 0.65% of the total outstanding amount. Given the absence of credit ratings for both private commercial banks and government banks, along with the substantial amount due from the Government, we identified the assessment of impairments for these assets as a key audit matter due to the significant judgments applied by management.	• We verified the completeness of these financial assets by obtaining confirmations and reconciling the carrying amounts of each asset category to ensure that all related exposures were thoroughly evaluated for impairment.
Key areas of significant judgment within the Expected Credit Loss (ECL) process included:	• We consulted with our internal IFRS specialists to scrutinize the appropriateness of the discount rate used for calculating the present value of cash flows for the assets, confirming that the rate was suitable.
• Assessing the expected cash flows associated with these instruments.	• We questioned management regarding the appropriate staging and the determination of suitable Loss Given Default (LGD) and Probability of Default (PD) for each asset category.
• Evaluating whether an appropriate discount rate was used to calculate the ECL for these assets.	• We consider that the assumptions made by management are reasonable.
• Assessing whether there was an elevated credit risk linked to other used instruments and evaluating the appropriateness of the staging classification based on the Significant Increase in Credit Risk assessment.	• We also reviewed the disclosures to confirm that they complied with IFRS 9 requirements.
• Evaluating the validity of the references used to establish the relevant rates for loss given default and the probability of default for these instruments.	Based on the procedures conducted, we concluded that the judgments made by the Bank are reasonable and that the related disclosures are appropriate.
The accounting policies, critical estimates and judgments, and impairment allowance are outlined in Notes 3(b), 9, and 28 (a) of the financial statements.

2. Going concern assessment and operating losses	The National Bank of Ethiopia operates to achieve its policy mandates, which include maintaining price and financial stability. Therefore, the effectiveness of its interventions is evaluated based on their success in meeting these mandates. To assess the impact of the current period operating losses and the negative general reserve balance on the Bank’s operations, we undertook the following procedures:
As discussed in Note 2(a), the National Bank of Ethiopia incurred an operating loss of Birr 10.5 billion and a net loss from operations totalling Birr 9.7 billion for the year. This has led to a negative equity balance of Birr 5.1 billion. In response, the board of directors has resolved to transfer the outstanding dividend payable to the Ministry of Finance from the previous period into the general reserve. This transfer has effectively diminished the deficit in the general reserve, resulting in a surplus in the equity balance.	• We engaged with management and those charged with governance to discuss their assessment of the going concern status, as well as their strategies to address the underlying causes of the operating losses and potential remedial actions to manage the negative general reserve position.
The operating losses were primarily due to:	• We reviewed the decision made by the board of directors to rectify the negative equity position by transferring the dividend payable balance to the general reserve.
- Impairment losses on government and government bank-related securities and loans and advances which amounts to 0.7 billion Birr,	• We reviewed various policy reforms and interventions initiated by the Board aimed at enhancing the Bank’s operations and strengthening the equity position to mitigate loss exposures from these interventions.
- Write-downs of gold commodities to net realizable value (NRV) which amounts to 6.9 billion Birr and	• We analysed the effects of various policy reforms implemented after the year-end, including the newly enacted proclamation which increases the bank capital and its implications for the Bank’s equity and liquidity.
- Exchange losses as a result of depreciation of the local currency and other foreign currency related transactions which amounts to 38.1 billion Birr.	• We assessed the impact of the Domestic Gold Purchase Program on the Bank’s equity and reserve.
The assessment of the bank's going concern status, along with the current period's operating loss, is considered a key audit matter due to the significant risks it presents, affecting:	• We further examined the associated disclosures.
- The Bank's ability to meet its operational and debt obligations as they become due.	Based on the procedures performed, we concluded that the judgments made and the response strategies adopted by the Bank to address the going concern issue and resolve the underlying causes of the operating loss, as well as the resulting negative general reserve, are reasonable. Additionally, the related disclosures were deemed appropriate.
- The Bank's capacity to fulfil its policy mandates, including maintaining stable rate of price and exchange, to foster a healthy financial system and to undertake such other related activities as are conducive to rapid economic development of Ethiopia.
- The Bank's ability to continue operating as a going concern.
This situation necessitates careful evaluation and monitoring to address the going concern issues and results of its operation.

3. Foreign exchange risk and currency conversion losses	To address this matter, we designed and performed audit procedures to evaluate the accuracy, completeness, and compliance of the Bank’s accounting for foreign currency transactions, including:
As disclosed in Note 8(b), the National Bank of Ethiopia incurred a net foreign exchange losses amounting to ETB 38.1 Billion for the year ended 30 June 2024 (ETB 12.2 Billion in 2023). These losses are primarily attributable to the on-going devaluation of the Ethiopian Birr, and the Bank's high exposure to foreign currency-denominated assets and liabilities, including obligations to international financial institutions and foreign currency reserves.	• Assessing the accounting policies adopted by the Bank for foreign currency translation and ensuring consistency with IAS 21 requirements.
The Bank operates in a macroeconomic context characterized by significant exchange rate volatility, high inflation, and regulatory interventions affecting foreign currency accessibility. In addition, the Government has issued forex regulations to reform the foreign exchange regime starting from July 2024, which could introduce further volatility and affect the Bank's financial position and results.	• Recalculating the exchange differences for a sample of foreign currency balances (assets and liabilities) to test the mathematical accuracy and appropriateness of applied exchange rates.
The accounting treatment of foreign currency transactions and balances is governed by IAS 21 – The Effects of Changes in Foreign Exchange Rates, which requires entities to apply appropriate spot rates at each reporting date and to recognize exchange differences in profit or loss. Given the magnitude of the losses, the sensitivity of the results to currency movements, and the complexity of the underlying exposures, we determined that the assessment of foreign exchange losses constituted a key audit matter.	• Reviewing year-end conversion rates to ensure they were based on observable and reliable sources, and that consistent methodologies were applied across all instruments.
	• Testing internal controls over the foreign exchange management process, including approval mechanisms, and controls over the recognition of exchange gains or losses.
	• Evaluating post-balance sheet events, including the policy decision on exchange rate reform announced by the Government in July 2024, and assessing the Bank's disclosure regarding the associated uncertainties and potential financial impact.
	We also reviewed the disclosures provided in the financial statements to ensure they were transparent, complete, and informative regarding the nature and sources of foreign exchange losses. Based on the procedures performed, we considered that the accounting treatment and related disclosures were appropriate, and that the Bank had adequately presented the impact of foreign exchange volatility.

4. Classification and valuation of financial instruments	Our audit procedures addressed both the classification criteria and the fair value measurement approaches applied by the Bank:
As presented in Notes 3(b), 9, 10, and 28 of the financial statements, the Bank holds a significant portfolio of financial instruments, including government securities, loans to commercial banks, investment placements, and deposits. These instruments are measured at amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL) in accordance with IFRS 9 – Financial Instruments.	• We reviewed the Bank’s assessment of its business models, including internal documentation, reporting structures, and evidence supporting whether financial assets were held to collect, to sell, or both.
The classification of financial assets under IFRS 9 requires an evaluation of both the business model for managing the instruments and the results of the SPPI test (Solely Payments of Principal and Interest). These assessments involve significant management judgment, particularly for instruments with non-standard features or where the contractual terms are complex or perpetual in nature.	• We evaluated the SPPI test outcomes, ensuring that the contractual cash flows of selected instruments represented only principal and interest. For complex instruments (e.g., perpetual advances), we challenged management’s assumptions and classifications.
In addition, the Bank applies IFRS 13 – Fair Value Measurement for the determination of fair values. For certain instruments, especially those falling into Level 2 (observable inputs other than quoted prices) or Level 3 (unobservable inputs) of the fair value hierarchy, the use of valuation techniques and assumptions becomes critical. These include discount rate selection, expected cash flow modelling, and adjustments for liquidity or credit risk.	• We tested the valuation techniques and assumptions used for instruments. This included evaluating the appropriateness of discount rates, cash flow forecasts, and liquidity adjustments.
Due to the subjectivity, complexity, and materiality of these judgments, we considered the classification and valuation of financial instruments as a key audit matter.	• We reconciled fair value disclosures with supporting schedules and assessed compliance with IFRS 7 and IFRS 13, particularly in terms of fair value hierarchy classification and sensitivity disclosures.
	Based on our work, we found that the classification decisions were appropriate and that the valuation methodologies were applied consistently and aligned with IFRS requirements.

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Other information

The Directors are responsible for the other information. The other information comprises the Report of the Directors and the Annual Report, which is expected to be made available to us after the audit report date. The other information does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not and will not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the company’s financial reporting process and ensuring the adequacy of internal controls and risk management.

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 that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise 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.

As part of an audit conducted in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a bases for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.
• Conclude on the appropriateness of the management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statement represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are, therefore, the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Seid Abdela.

MSE Audit Service LLP Addis Ababa 13 June 2025

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National Bank of Ethiopia

Statement of Profit or Loss and Other Comprehensive Income

For the year ended 30 June 2024

(In Ethiopian Birr)

	Note	30 June 2024	30 June 2023
Interest income	4	27,997,420,307	22,712,530,273
Interest expense	4	(9,272,965,249)	(5,342,833,233)
Net interest income		18,724,455,058	17,369,697,040
Fee and commissions income	5	13,406,174,311	12,109,205,742
Revenue from sale of gold	6	4,978,625,325	14,098,776,971
Other income	7(a)	250,861,069	217,375,911
Net non-interest income		18,635,660,705	26,425,358,624
Net operating income		37,360,115,763	43,795,055,664
Currency costs	8 (a)	(1,030,743,077)	(3,816,098,288)
General and administration costs	8 (b)	(38,629,764,167)	(13,221,606,686)
Salaries and related benefits	8 (c)	(600,216,540)	(513,580,743)
Gold purchase, refinery, and other related costs	8 (d)	(6,920,772,961)	(15,522,836,443)
Impairment losses on financial assets	8(e),9,15	(691,015,146)	(1,663,471,402)
Operating surplus/Loss before (un) realised gains / (losses)		(10,512,396,128)	9,057,462,102
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit obligation	25 (b)	50,478,770	(172,418,020)
Fair value gains / (losses) on monetary gold		-	-
Fair value gains / (losses) on financial assets	7(b)	801,483,553	1,309,320,567
Other comprehensive income		851,962,323	1,136,902,547
Total comprehensive profit/(loss)		(9,660,433,805)	10,194,364,649

The notes on pages 13 to 117 are an integral part of these financial statements.

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National Bank of Ethiopia

Statement of Financial Position

As at 30 June 2024

(In Ethiopian Birr)

Assets	Note	30 June 2024	30 June 2023
Balances due from foreign entities - Commercial banks	9 (c)	32,055,598,466	26,546,453,204
Balances due from foreign entities - Central banks	9 (d)	47,483,737,622	27,228,439,137
Cash - foreign currencies	9 (e)	712,631,306	654,953,910
Funds held with IMF	9 (f),18	176,870,099	106,243,555
IMF Quota Subscription	18	22,557,124,177	21,941,217,675
Gold commodity	11	141,169,916	95,104,815
Loans to government banks	9 (b)	134,058,854,802	137,758,663,898
Loans to private commercial banks	9 (g)	13,209,468,542	15,054,294,232
Equity Investment	10	1,130,087,452	913,787,046
Property and equipment	13	2,023,678,015	1,434,863,480
Other assets	15	18,264,837,377	18,884,556,376
Intangible asset	14	427,643	1,234,513
Due from Government of Ethiopia	9 (a)	683,336,429,771	583,119,662,333
Right of use asset	16	5,634,610	2,747,351
Total assets		955,156,549,798	833,742,221,525
Liabilities
Currency in circulation	21	258,835,844,757	255,855,630,180
Deposits due to local financial institutions, government, and government institutions	17	352,308,833,697	359,930,191,365
Due to International Monetary Fund (IMF)	18	81,338,275,471	90,657,013,578
Funds due to international financial institutions	19	35,839,398	9,854,742
Due to other institutions	20	232,846,343,070	110,269,289,467
Due to the Ministry of Finance	24	-	11,120,875,954
Deferred revenue	23(d)	8,392,833	8,878,846
Lease liability	16	5,893,892	3,090,450
Provisions	22	44,465,837	41,419,704
Employee benefits	25	408,533,094	394,772,324
Other liabilities	26	23,367,552,387	955,071,700
Total Liabilities		949,199,974,436	829,246,088,310
Equity
Capital	27 (a)	500,000,000	500,000,000
General reserve	27 (b)	(377,188,338)	(985,668,162)
Retained earnings	27 (b)	-	-
Fair value reserve	27 (e)	2,397,094,874	1,595,611,321
Defined benefit reserve	25 /27(f)	(68,903,678)	(119,382,448)
International reserve valuation	27 (c)	3,849,198,654	3,849,198,654
Other reserve	27 (g)	(343,626,150)	(343,626,150)
Total equity		5,956,575,362	4,496,133,215
Total liabilities and equity		955,156,549,798	833,742,221,525

The notes on pages 13 to 117 are an integral part of these financial statements.

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National Bank of Ethiopia

Statement of Changes in Equity

For the year ended 30 June 2024

(In Ethiopian Birr)

	Note	Capital	General reserve	Other Reserve	International reserve valuation	Retained earnings	Defined benefit reserve	Fair value reserve	Total Equity
Balance as of 1 July 2022		500,000,000	(2,797,160,582)	(343,626,150)	3,849,198,654	-	53,035,572	286,290,754	1,547,738,248
Total comprehensive income:
Profit/Loss for the year	27 (d)	-	-	-	-	9,057,462,102	-	-	9,057,462,102
Other comprehensive income	27 (f)	-	-	-	-	-	(172,418,020)	1,309,320,567	1,136,902,547
Total comprehensive income		-	-	-	-	9,057,462,102	(172,418,020)	1,309,320,567	10,194,364,649
Transactions with owners of the Bank:
Transfer to / (from) General reserve	27 (b)	-	1,811,492,420	-	-	(1,811,492,420)	-	-	-
Transfer to MOF	24/27 (d)	-	-	-	-	(7,245,969,682)	-	-	(7,245,969,682)
Balance as at 30 June 2023		500,000,000	(985,668,162)	(343,626,150)	3,849,198,654	-	(119,382,448)	1,595,611,321	4,496,133,215
Total comprehensive income:
Profit for the year	27 (d)	-	-	-	-	(10,512,396,128)	-	-	(10,512,396,128)
Other comprehensive income	27 (f)	-	-	-	-	-	50,478,770	801,483,553	851,962,323
Total comprehensive income		-	-	-	-	(10,512,396,128)	50,478,770	801,483,553	(9,660,433,805)
Transactions with owners of the Bank:
Transfer to / (from) Other reserve	27 (b)	-	(10,512,396,128)	-	-	10,512,396,128	-	-	-
-Transfer to/(from) MOF	24/27 (d)	-	11,120,875,952	-	-	-	-	-	11,120,875,952
Balance as at 30 June 2024		500,000,000	(377,188,338)	(343,626,150)	3,849,198,654	-	(68,903,678)	2,397,094,874	5,956,575,362

The notes on pages 13 to 117 are an integral part of these financial statements.

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National Bank of Ethiopia

Statement of Cash Flows

For the year ended 30 June 2024

(In Ethiopian Birr)

	Note	30 June 2024	30 June 2023
Cash flows from operating activities:
Operating surplus/Loss for the year		(10,512,396,128)	9,057,462,102
Impairment of loans and advances	8(e),9, 15	691,015,146	1,663,471,402
Depreciation and amortization	13, 14	102,418,314	94,918,477
Net interest income	4	(18,724,455,058)	(17,369,697,040)
Dividend income	7	(35,852,659)	(18,430,518)
Interest paid on lease obligation	16	376,937	140,956
Loss/( Gain) on disposal of property, plant, and equipment	13	1,294,941	47,310
Loss on inventory write down	11	78,942,028	34,046,877
Losses on currency notes in custody	21	-	60,261,200
		(28,398,656,479)	(6,477,779,234)
Changes in working capital:
Loans to government banks and commercial banks	9 (b, c, g)	5,537,874,737	2,734,708,450
Other assets	15	617,299,750	1,700,978,832
Deposits due from foreign entities - central banks and commercial banks	9(c,d)	(1,786,108,060)	3,922,562,205
Currency in circulation	21	2,980,214,577	46,104,132,856
Due to International Monetary Fund (IMF)	18	(9,336,796,780)	5,780,707,324
Due to International financial institutions	19	25,984,656	7,035,388
Due to other institutions	20	120,725,389,051	5,246,854,904
Deposits due to local financial institutions, government, and government institutions	17	(7,621,357,668)	107,061,033,672
Gold commodity	11	(125,007,129)	2,890,180,172
Due from Government of Ethiopia	9 (a)	(100,602,039,994)	(206,832,576,315)
Provisions	22	3,046,133	5,357,799
Deferred revenue	23 (d)	(486,013)	(3,160,193)
Employee benefits	25	64,239,540	26,039,382
Other liabilities	26	22,412,480,687	(1,384,179,355)
Interest income received		27,701,394,719	28,073,132,486
Interest expense paid		(7,403,242,024)	(5,242,313,670)
Net cash provided by operating activities		24,794,229,703	(16,387,285,297)
Cash flows from investing activities:
Increase of ROU assets	16	(4,062,894)	(1,305,914)
Dividends received	7	35,852,659	18,430,518
Increase in equity investment & IMF quota*	10	(30,723,355)	(379,880,714)
Acquisition of properties and equipment	13	(690,545,287)	(200,824,293)
Net cash used in investing activities		(689,478,877)	(563,580,403)
Cash flows from financing activities:
Payments on finance lease obligations	16	(1,333,277)	(472,818)
(Increase)/decrease in lease measurement	16	3,759,782	1,305,914
Remittance of annual profits to the Ministry of Finance	24	-	(1,500,000,000)
Net cash from financing activities		2,426,505	(1,499,166,904)
Increase (decrease) in cash and cash equivalents		24,107,177,331	(18,450,032,604)
Cash and cash equivalents at beginning of period	9 (f)	34,762,919,079	53,212,951,683
Cash and cash equivalents at end of period	9 (f)	58,870,096,410	34,762,919,079

*Fair value related adjustments of Equity investment and CVA of IMF quota subscription measured through OCI has been excluded from the cash flow statement (as per IAS-7 p.43). For detail refer (note 10 & 18).

The notes on pages 13 to 117 are an integral part of these financial statements.

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National Bank of Ethiopia

Notes to the Financial Statements

For the year ended 30 June 2024

1. Reporting entity

National Bank of Ethiopia (“the Bank”) is the Central Bank of Ethiopia. It was established by Order No. 30/1963 as an autonomous institution. It is governed by the National Bank of Ethiopia Establishment (as Amended) Proclamation No. 591/2008 and is wholly owned by the Government of the Federal Democratic Republic of Ethiopia.

Its principal place of business is Addis Ababa.

It operates as the Central Bank of Ethiopia and acts as the banker, fiscal agent and financing advisor of the Government of Ethiopia and is domiciled in Ethiopia.

2. Basis of preparation

(a) Going concern

The National Bank of Ethiopia recorded a net operating loss of Birr 10.5 billion for the 2024 financial year. However, following the Board’s decision to strengthen the Bank’s capital position, the accumulated dividend payable to the Ministry of Finance was transferred to the General Reserve. As a result, the General Reserve balance improved to a negative Birr 0.4 billion as of 30 June 2024, compared to a negative balance of Birr 1 billion in 2023. The net operating loss of 10.5 billion in 2024 F.Y. was largely due to: (1) an impairment loss on government and government bank related securities plus loans and advances, (2) gold commodity inventory write down to the NRV and (3) a depreciation of the local currency which resulted in exchange losses.

In the view of the Board of Directors and Management, the Bank will continue to operate as a going concern. A central bank is considered policy solvent when it generates sufficient realized income to cover the costs associated with monetary policy operations. Given the expectation of more favorable macroeconomic conditions, driven by ongoing and wide-ranging policy reforms, the Directors believe there is minimal risk to the Bank’s ability to generate adequate income to sustain its monetary policy operations.

In addition to the anticipated positive impact of macroeconomic conditions on the Bank’s financial position, the Management has assessed the impact of the new National Bank of Ethiopia (NBE) Proclamation No. 1359/2025 on the Bank’s solvency. Based on this assessment, management believes that the provisions under Article 8 of the Proclamation will significantly enhance the policy solvency of the central bank.

Article 8, Sub-article 1, establishes the authorized capital of NBE at Birr 20 billion, of which Birr 10 billion is paid-up capital. Furthermore, Article 8, Sub-article 4(a), clearly stipulates that unrealized gains shall not be distributed but instead maintained in the valuation reserve. In addition, the General Reserve Fund is required to be equal to 5% of the Bank’s monetary liabilities, and no profit distribution shall occur until this reserve target is met.

These provisions are expected to strengthen NBE’s capital base, improve loss absorption capacity, and thereby contribute positively to the Bank’s policy solvency.

Based on the above, the Directors have a reasonable expectation that these measures will support the Bank’s continued operational efficiency and long-term sustainability.

Thus, the financial statements of the Bank have been prepared under the going-concern assumption.

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2. Basis of preparation (Continued)

(b) Statement of compliance

The accompanying financial statements of the Bank have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and National Bank of Ethiopia Establishment (as Amended) Proclamation No. 591/2008.

Extension of Pronouncement on the Application of International Accounting standard (IAS 29), Financial Reporting in Hyperinflationary Economies, in Ethiopia by Accounting and Auditing Board of Ethiopia

The Accounting and Auditing Board of Ethiopia is a statutory body established under Ethiopia Council of Ministers Regulation No. 332/2014 basing the financial reporting proclamation 847/2014, to regulate the accounting profession as well as for issuing a national professional accountancy qualification in Ethiopia. As part of its regulatory functions, it issued Pronouncement No. AABE/002/2025, reaffirming that the evidence and conclusions outlined in Pronouncement No. AABE/001/2023 remains valid. Specifically, the indicators of a hyperinflationary economy, as outlined in paragraph 3 of IAS 29 including a cumulative three-year inflation rate approaching or exceeding 100% are not currently evident in the Ethiopian economy. The statutory body concluded that, Ethiopia is not operating in a hyperinflationary economy. The requirements of IAS 29 are therefore deemed not applicable in the recognition, measurement, presentation, and disclosures in the financial statements for the financial year ended 30 June 2024.

Accounting standards are applied on the assumption that the value of money (the unit of measurement) is Constant over time. However, when the rate of inflation is no longer negligible, a number of issues arise impacting the true and fair nature of the accounts of entities that prepare their financial statement on historical cost basis. To address such concerns International Accounting Standards Board has issued IAS 29, Financial Reporting in Hyperinflationary Economies. However, IAS 29 does not establish an absolute inflation rate at which an economy is considered hyperinflationary. Instead, it considers a variety of non-exhaustive factors to determine the existence of hyperinflation. The indicators stated under paragraph 3 of the standard include, but are not limited to, the following:

a. The general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power; b. The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency; c. Sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short; d. Interest rates, wages, and prices are linked to a price index; and e. The cumulative inflation rate over three years is approaching, or exceeds, 100%.

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2. Basis of preparation (Continued)

(b) Statement of compliance (continued)

Given most of the criteria (a-e) stated above and based on the assessments conducted to check whether Ethiopia is hyperinflationary economy or not, the Accounting and Auditing Board of Ethiopia has concluded that Ethiopia is not a hyperinflationary economy for the year 2024, 2025 and beyond, unless new evidence emerges and a new revised pronouncement issued. Therefore, the requirements of IAS 29 are not applicable for financial reporting for the year ended 30 June 2024.

On 12 June, 2025, the Governor authorized the issuance of the accompanying financial statements.

(c) Basis of accounting

The financial statements have been prepared on the historical cost basis, except for the following significant items:

1. Financial instruments measured at amortised cost and at fair value;
2. Monetary gold measured at fair value; and
3. Measurement of defined benefits obligations: key actuarial assumptions.

(d) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Bank operates (the “Functional currency”).

The financial statements are presented in Ethiopian Birr (ETB), which is the Bank’s functional currency, and all values are rounded to the nearest Birr, except when otherwise indicated.

(e) Use of judgments and estimates

In preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of the Bank’s accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

Judgments Information about judgment made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:

Note 3 (b (ii)) - Classification of financial assets: assessment of the business model within which the assets are held and assessment of whether the contractual terms of the financial assets are Solely Payments of Principal and Interest (SPPI) on the principal amount outstanding;

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2. Basis of preparation (Continued)

(e) Use of judgments and estimates (Continued)

Note 3 (b (viii)) - Establishing the criteria for determining whether credit risk on the financial asset has increased significantly since initial recognition, determining methodology for incorporating forward-looking information into measurement of Expected Credit Losses (ECL) and selection and approval of models used to measure ECL; and

Note 3 (e) - Leases; whether a contract contains a lease.

Estimates on uncertainties and assumptions Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively in the financial statements.

Information on assumptions and uncertainty of estimates posing a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the year ending 30 June 2024 is included in the following notes as set out below:

Note 3 (b (i; ii)) – identification and measurement of financial instruments; Note 3 (c) and (d) – useful lives and salvage value of tangible and intangible assets; Note 3 (k) – measurement of employee benefits liability: key actuarial assumptions; Note 3 (b) (viii) - impairment of financial instruments: key assumptions used in estimating recoverable cash flows; and Note 3 (j) and (t) - recognition and measurement of provisions and contingencies.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

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3. Significant accounting policies

(a) Foreign currency transactions

Transactions in foreign currencies on a day to day basis are recorded at the respective buying and selling rate. The closing balances on these foreign currency accounts at the close of business are translated using the mid-exchange rate.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the mid-exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortized cost in the foreign currency translated at the mid-exchange rate at the end of the year.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the spot exchange rate at the date on which the fair value is determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction.

Foreign currency differences arising on translation are generally recognised in profit or loss.

(b) Financial instruments

(i) Recognition and initial measurement The Bank initially recognizes cash, loans and advances, deposits, and debt securities on the date on which they are originated. All other financial instruments (including assets designated at fair value through profit or loss) are recognized on the trade date on which the Bank becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(ii) Classification and subsequent measurement a. Financial assets: On initial recognition, financial assets are classified into one of the following measurement categories:

• Amortised cost;
• Fair value through other comprehensive income (FVOCI);
• Fair value through profit or loss (FVTPL);
• Elected at fair value through other comprehensive income (equities only); or
• Designated at FVTPL

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued)

Financial assets include both debt and equity instruments. Financial assets are not reclassified subsequent to their initial recognition unless the Bank changes its Business model for managing financial assets, in which case all affected financial assets are reclassified on the first of the first reporting period following the change in the Business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:

• the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Bank may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.

All other financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Bank may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Debt instruments, including loans and debt securities, are classified into one of the following measurement categories:

• Amortised cost;
• Fair value through other comprehensive income (FVOCI);
• Fair value through profit or loss (FVTPL); or
• Designated at FVTPL

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued)

Classification of debt instruments is determined based on: (i) The business model under which the asset is held; and (ii) The contractual cash flow characteristics of the instrument.

Business model assessment Business model assessment involves determining how financial assets are managed in order to generate cash flows. The Bank’s business model assessment is based on the following categories:

• Held to collect: The objective of the business model is to hold assets and collect contractual cash flows. Any sales of the asset are incidental to the objective of the model.
• Held to collect and for sale: Both collecting contractual cash flows and sales are integral to achieving the objectives of the business model.
• Other business model: The business model is neither held-to-collect nor held-to-collect and for sale.

The Bank makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

• the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management’s strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Bank’s management;
• the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
• how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
• the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Bank’s stated objective for managing the financial assets is achieved and how cash flows are realised.

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued):

Business model assessment (continued) Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Bank’s continuing recognition of the assets.

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.

Assessments whether contractual cash flows are solely payments of principal and interest

The contractual cash flow characteristics assessment involves assessing the contractual features of an instrument to determine if they give rise to cash flows that are consistent with a basic lending arrangement. Contractual cash flows are consistent with a basic lending arrangement if they represent cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and other (e.g., liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Bank considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Bank considers:

• contingent events that would change the amount and timing of cash flows;
• leverage features;
• prepayment and extension terms;
• terms that limit the Bank’s claim to cash flows from specified assets (e.g. non-recourse asset arrangements); and
• Features that modify consideration of the time value of money – e.g., periodical reset of interest rates.

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued):

Assessment whether contractual cash flows are solely payments of principal and interest (continued)

Debt instruments measured at amortized cost Debt instruments are measured at amortized cost if they are held within a business model whose objective is to hold for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. After initial measurement, debt instruments in this category are carried at amortized cost. Interest income on these instruments is recognized in interest income using the effective interest rate method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. Amortized cost is calculated by taking into account any discount or premium on acquisition, transaction costs and fees that are an integral part of the effective interest rate.

Impairment on debt instruments measured at amortized cost is calculated using the expected credit loss approach. Loans and debt securities measured at amortized cost are presented net of the allowance for credit losses (ACL) in the statement of financial position.

Debt instruments are measured at FVOCI if they are held within a business model whose objective is to hold for collection of contractual cash flows and for selling financial assets, where the assets’ cash flows represent payments that are solely payments of principal and interest. Subsequent to initial recognition, unrealized gains and losses on debt instruments measured at FVOCI are recorded in other comprehensive income (OCI). Upon derecognition, realized gains and losses are reclassified from OCI and recorded in non-interest income in the Statement of Profit or Loss and Other Comprehensive Income on an average cost basis. Foreign exchange gains and losses that relate to the amortized cost of the debt instrument are recognized in the Statement of Profit or Loss and Other Comprehensive Income.

Premiums, discounts, and related transaction costs are amortized over the expected life of the instrument to Interest income in the Statement of Profit or Loss and Other Comprehensive Income using the effective interest rate method.

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued):

Debt instruments measured at FVOCI (Continued) Impairment on debt instruments measured at FVOCI is calculated using the expected credit loss approach. The allowance for credit losses (ACL) on debt instruments measured at FVOCI does not reduce the carrying amount of the asset in the Statement of Financial Position, which remains at its fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortized cost is recognised in OCI with a corresponding charge to provision for credit losses in the Statement of Profit or Loss and Other Comprehensive Income. The accumulated allowance recognised in OCI is recycled to the Statement of Profit or Loss and Other Comprehensive Income upon derecognition of the debt instrument.

Debt instruments measured at FVTPL Debt instruments are measured at FVTPL if assets: i) Are held for trading purposes; ii) Are held as part of a portfolio managed on a fair value basis; or iii) Whose cash flows do not represent payments that are solely payments of principal and interest.

These instruments are measured at fair value in the Statement of Financial Position, with transaction costs recognized immediately in the Statement of Profit or Loss and Other Comprehensive Income as part of non-interest income. Realized and unrealized gains and losses are recognized as part of non-interest income in the Statement of Profit or Loss and Other Comprehensive Income.

Debt instruments designated at FVTPL Financial assets classified in this category are those that have been designated by the Bank upon initial recognition, and once designated, the designation is irrevocable. The FVTPL designation is available only for those financial assets for which a reliable estimate of fair value can be obtained.

Financial assets are designated at FVTPL if doing so eliminates or significantly reduces an accounting mismatch which would otherwise arise. The decision to designate relates to assets that otherwise meet requirements to be measured at amortised cost or as at FVOCI but are designated at FVTPL to reduce account mismatch.

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued):

Debt instruments designated at FVTPL (Continued) Financial assets designated at FVTPL are recorded in the Statement of Financial Position at fair value. Changes in fair value are recognized in non-interest income in the Statement of Profit or Loss and Other Comprehensive Income.

Equity instruments Equity instruments are classified into one of the following measurement categories:

• Fair value through profit or loss (FVTPL); or
• Elected at fair value through other comprehensive income (FVOCI).

Equity instruments measured at FVTPL Equity instruments are measured at FVTPL, unless an election is made to designate them at FVOCI upon purchase, with transaction costs recognized immediately in the Statement of Income as part of non-interest income. Subsequent to initial recognition the changes in fair value are recognized as part of non-interest income in the Statement of Profit or Loss and Other Comprehensive Income.

Equity instruments measured at FVOCI At initial recognition, there is an irrevocable option for the Bank to classify non-trading equity instruments at FVOCI. This election is used for certain equity investments for strategic or longer-term investment purposes. This election is made on an instrument-by-instrument basis and is not available to equity instruments that are held for trading purposes.

Gains and losses on these instruments including when derecognized/sold are recorded in OCI and are not subsequently reclassified to the Statement of Profit or Loss and Other Comprehensive Income. As such, there is no specific impairment requirement.

Dividends received are recorded in other income in the Statement of Profit or Loss and Other Comprehensive Income. Any transaction costs incurred upon purchase of the security are added to the cost basis of the security and are not reclassified to the Statement of Profit or Loss and Other Comprehensive Income on sale of the security.

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3. Significant accounting policies (continued)

(b) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) a. Financial assets (continued):

Reclassifications Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Bank changes its business model for managing financial assets.

b. Financial liabilities The Bank classifies its financial liabilities, other than financial guarantees and loan commitments, as measured at amortised cost.

The financial instruments at NBE have been classified into one of the following categories and their measurement criteria defined as follows based on their nature and business purpose:

Financial assets	Measurement criteria
Due from Government of Ethiopia (Note 9(a))	Amortised cost
Loans to government banks (Note 9(b))	Amortised cost
Due from foreign institutions – commercial banks (Note 9 (c))	Amortised cost
Due from foreign institutions – central banks (Note 9(d))	Amortised cost
Cash - foreign currencies (Note 9 (e))	Amortised cost
Funds held with IMF (Note 9 (f))	Amortised cost
Loans to private commercial banks (Note 9 (g))	Amortised cost
Loans to employees (Note 15 (a))	Amortised cost
Equity Investment and IMF Quota Subscription (Note 10 & 18)	Fair value through OCI

Financial liabilities	Measurement criteria
Deposits from banks and government (Note 17)	Amortised cost
Due to International Monetary Fund (IMF) (Note 18)	Amortised cost
Due to international financial institutions (Note 19)	Amortised cost
Due to other institutions (Note 20)	Amortised cost
Currency in circulation (Note 21)	Fair value

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3.