National Bank of Ethiopia Audited Financial Statements for the Year Ended 30 June 2025

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National Bank of Ethiopia

(Federal Democratic Republic of Ethiopia)

Audited Financial Statements

For the year ended 30 June 2025

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National Bank of Ethiopia

Financial Statements

For the year ended 30 June 2025

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 – 123

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National Bank of Ethiopia
Annual Financial Statements
For the year ended 30 June 2025

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 2025, 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 123 were approved by the Governor on behalf of the Board of Directors on 30 December 2025.

Signed on behalf of the Directors

[Signature]
Eyob Tekalign (PHD)
Governor

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30 December 2025

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Guinea Conakry Street, Kazanchis District
Grant Thornton Building 4th Floor
P.O.Box 1162, Addis Ababa, Ethiopia
T +251 11 552 5575 /552 2632
F +251 11 552 4855 E info@et-mse.com

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 (the “Bank”), which comprise the statement of financial position as at 30 June 2025, 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 2025, and its financial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standard (IFRSs).

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.

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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 to 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 evaluated the implementation of key controls related to the calculation of impairment losses.

Loan to government banks: 114,160,396,802	• 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: 1,143,401,411
Due from Government of Ethiopia: 739,584,073,003	• 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.
854,887,871,216
The Bank conducted an impairment assessment of these assets as of 30 June 2025, and 30 June 2024. A provision of Birr 4,526,158,028 has been recognized for these balances, reflecting a decline from Birr 5,456,148,892 in 2024, which corresponds to a decline of 17%, resulting in reversal of impairment loss on these financial assets which amounts to Birr 815,607,632 after considering the additional expected credit loss made on other financial assets. The provision amount represents 0.53% (0.65% in 2024) of the total outstanding amount. The decline in provision is mainly attributable to decline in the probability of default for balance due from government of Ethiopia and decline in the outstanding exposures from government banks.	• 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.
	• 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.
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 questioned management regarding the appropriate staging and the determination of suitable Loss Given Default (LGD) and Probability of Default (PD) for each asset category.
Key areas of significant judgment within the Expected Credit Loss (ECL) process included:	• We considered that the assumptions made by management are reasonable.
• Assessing the expected cash flows associated with these instruments.	• We assessed the reasonableness of key assumptions, including probability of default and macroeconomic scenarios, with reference to external data where relevant.
• Evaluating whether an appropriate discount rate was used to calculate the ECL for these assets.	• We also reviewed the ECL related disclosures to confirm that they complied with IFRS 9 requirements.
• Assessing whether there was an elevated credit risk linked to other issued instruments and evaluating the appropriateness of the staging classification based on the Significant Increase in Credit Risk assessment.	• Assessing the appropriateness of credit risk staging, including qualitative SICR criteria. We have also tested the accuracy and completeness of data used in the ECL models.
• 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, the forward-looking information, including selection and weighting of macroeconomic scenarios, is 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.

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2. Negative equity 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 equity balance on the Bank’s operations, we undertook the following procedures:
As discussed in Note 2(a), the National Bank of Ethiopia incurred a net operating loss of Birr 428.56 billion and a net loss from operations totalling Birr 395.5 billion for the year. This has led to a negative equity balance of Birr 380 billion. The operating losses were primarily due to:	• We have discussed with management and those charged with governance regarding their assessment of the going concern status of the Bank, as well as their strategies to address the underlying causes of the operating losses and potential remedial actions to manage the negative equity position.
- Unrealized net foreign exchange losses amounts to Birr 445 billion arising from the translation of the Bank’s foreign currency assets and liabilities due to one of a correction to the change in foreign exchange regime.	• We have reviewed the relevant provisions of the National Bank of Ethiopia Proclamation No. 1359/2025, particularly Article 8, which significantly enhances the Bank’s policy solvency. The new proclamation raises the authorized capital of the Bank to Birr 20 billion, of which Birr 10 billion is paid-up. Additional provisions in the proclamation include measures to address liquidity and solvency issues, such as stipulations that unrealized gains must not be distributed but instead transferred to the revaluation reserve and the General Reserve Fund must be maintained at 5% of the Bank’s monetary liabilities, and profit distribution cannot occur until this threshold is met. These provisions are anticipated to strengthen the Bank’s capital base, improve its loss-absorption capacity, and positively impact its equity solvency.
- Loss on sales of gold and write-downs of gold commodities to net realizable value (NRV) which amounts to 57.2 billion Birr
According to the provisions of the National Bank of Ethiopia Proclamation No. 1359/2025, unrealized gains and losses is transferred to the Revaluation Reserve account, while other profits and losses will go to the General Reserve account. As a result, the General Reserve balance reflects a positive amount of 16.3 billion Birr, whereas the Revaluation Reserve account shows a deficit of 441.4 billion Birr as at 30 June 2025. This indicates that the Bank is significantly exposed to unrealized exchange losses, which will be realized when the repayment terms for most obligations are due. This exposure could possibly exceed the paid-up capital and General Reserve balances of the Bank when realized, necessitating a strategic intervention to effectively manage this challenge and ensure the going concern status of the Bank.	• We have reviewed other policy reforms and interventions initiated by the Board to improve the Bank’s operations and strengthen its equity position, thereby mitigating loss exposures from these initiatives. Notably, the Bank is currently conducting a comprehensive capital assessment and policy solvency study to evaluate the adequacy of its capital in fulfilling its mandate and to identify any necessary measures to ensure its financial sustainability.
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 assessed the impact of the Domestic Gold Purchase Program on the Bank’s equity and reserve.
• The Bank’s ability to meet its operational and debt obligations as they become due.	• We further examined the associated disclosures.
• 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, and	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 losses, as well as the resulting negative equity position, are reasonable. Additionally, the related disclosures were deemed appropriate.
• 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.

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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(f), the National Bank of Ethiopia incurred a net unrealized foreign exchange losses amounting to ETB 445.2 Billion for the year ended 30 June 2025 (ETB 38.1 Billion in 2024). These losses are primarily attributable to one of a correction to the change in foreign exchange regime 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.
	• 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.	• 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.
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.	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.

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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 to 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.
	• Evaluated whether accounting policies for classification, initial recognition and subsequent measurement are consistent with IFRS 9 and appropriately applied
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.
	• We tested the valuation techniques and assumptions used for instruments. This included evaluating the appropriateness of discount rates, cash flow forecasts, liquidity adjustments and consistency with IFRS 13 requirements.
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 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.
Due to the subjectivity, complexity, and materiality of these judgments, we considered the classification and valuation of financial instruments as a key audit matter.	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.

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a 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, FCCA

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Addis Ababa
30 December 2025

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National Bank of Ethiopia
Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2025 (In Ethiopian Birr)

	Note	30 June 2025	30 June 2024
Interest income	4	46,918,855,325	27,997,420,307
Interest expense	4	(24,450,104,761)	(9,272,965,249)
Net interest income		22,468,750,564	18,724,455,058

Fee and commissions income	5	34,665,189,471	13,406,174,311
Revenue from sale of gold	6	275,215,331,595	4,978,625,325
Other income	7(a)	17,514,152,169	250,861,069
Net non-interest income		327,394,673,235	18,635,660,705

Net operating income		349,863,423,799	37,360,115,763

Currency costs	8 (a)	-	(1,030,743,077)
General and administration costs*	8 (b)	(17,744,567,097)	(492,910,264)
Salaries and related benefits	8 (c)	(705,831,978)	(600,216,540)
Gold purchase, refinery, and other related costs	8 (d)	(315,557,644,654)	(6,920,772,961)
Impairment losses on financial assets	8(e),9,15	815,607,632	(691,015,146)
Operating surplus/Deficit before unrealized gains/losses		16,670,987,702	27,624,457,775

Unrealized Gain/Loss
Foreign Exchange Gain/Loss*	8(f)	(445,232,054,700)	(38,136,853,903)
Operating surplus/Deficit for the year		(428,561,066,998)	(10,512,396,128)

Other comprehensive income:
Items that will not be reclassified to profit or loss:
Measurement of defined benefit obligation	25 (b)	29,936,428	50,478,770
Fair value gains / (losses) on financial assets	7(b)	33,029,810,861	801,483,553
Other comprehensive income		33,059,747,289	851,962,323

Total comprehensive profit/(loss)		(395,501,319,709)	(9,660,433,805)

*To enhance comparability in the presentation of unrealized foreign exchange gains and losses, the prior year balance of foreign exchange loss/gain recorded under General & Administrative Expenses and transferred to the General Reserve in accordance with the former proclamation, which did not distinguish between realized and unrealized amounts, has now been reclassified and reported separately. In line with the requirements of the new proclamation, the balance is presented separately under Unrealized Foreign Exchange Losses, as the majority of the exchange losses reported in the prior year represented unrealized in nature. The reclassification is made for disclosure purpose only and doesn’t restate the general reserve balance as reported in the SFP.

The notes on pages 13 to 123 are an integral part of these financial statements.

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National Bank of Ethiopia
Statement of Financial Position
As at 30 June 2025
(In Ethiopian Birr)

Assets	Note	30 June 2025	30 June 2024
Balances due from foreign entities - Commercial banks	9 (c)	126,334,596,704	32,055,598,466
Balances due from foreign entities - Central banks	9 (d)	456,880,198,197	47,483,737,622
Cash - foreign currencies	9 (e)	8,881,794,696	712,631,306
Funds held with IMF	9 (f),18	3,696,567,731	176,870,099
IMF Quota Subscription	18	53,544,400,719	22,557,124,177
Gold commodity	11	88,619,257,204	141,169,916
Loans to government banks	9 (b)	113,560,820,595	134,058,854,802
Loans to private commercial banks	9 (g)	1,101,152,729	13,209,468,542
Equity Investment	10	3,284,445,072	1,130,087,452
Property and equipment	13	3,439,001,189	2,023,678,015
Other assets	15	67,787,307,472	18,264,837,377
Intangible asset	14	-	427,643
Due from Government of Ethiopia	9 (a)	735,699,739,861	683,336,429,771
Right of use asset	16	117,478,691	5,634,610
Total assets		1,662,946,760,860	955,156,549,798

Liabilities
Currency in circulation	21	344,538,456,488	258,835,844,757
Deposits due to local financial institutions, government, and government institutions	17	749,377,839,392	352,308,833,697
Due to International Monetary Fund (IMF)	18	394,176,089,488	81,338,275,471
Funds due to international financial institutions	19	34,939,120	35,839,398
Due to other institutions	20	552,612,828,833	232,846,343,070
Due to the Ministry of Finance	24	-	-
Deferred revenue	23(d)	12,990,855	8,392,833
Lease liability	16	115,627,447	5,893,892
Provisions	22	48,872,657	44,465,837
Employee benefits	25	443,528,821	408,533,094
Other liabilities	26	1,630,332,106	23,367,552,387
Total Liabilities		2,042,991,505,207	949,199,974,436

Equity
Capital	27 (a)	10,000,000,000	500,000,000
General reserve	27 (b)	16,293,799,364	(377,188,338)
Retained earnings	27 (d)	-	-
Fair value reserve	27 (e)	35,426,905,735	2,397,094,874
Defined benefit reserve	25 /27(f)	(38,967,250)	(68,903,678)
International reserve valuation	27 (c)	(441,382,856,046)	3,849,198,654
Other reserve	27 (g)	(343,626,150)	(343,626,150)
Total equity		(380,044,744,347)	5,956,575,362
Total liabilities and equity		1,662,946,760,860	955,156,549,798

The notes on pages 13 to 123 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 2025
(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 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/Loss 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) General reserve	27 (b)	-	(10,512,396,128)	-	-	10,512,396,128	-	-	-
Transfer 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

Total comprehensive income:
Profit for the year	27 (d)	-	-	-	-	(428,561,066,998)	-	-	(428,561,066,998)
Other comprehensive income	27 (f)	-	-	-	-	-	29,936,428	33,029,810,861	33,059,747,289
Total comprehensive income		-	-	-	-	(428,561,066,998)	29,936,428	33,029,810,861	(395,501,319,709)
Transactions with owners of the Bank:
Transfer to / (from) General reserve	27 (b)	-	16,670,987,702	-	(445,232,054,700)	428,561,066,998	-	-	-
Increase in paid-up capital	24/27 (d)	9,500,000,000	-	-	-	-	-	-	9,500,000,000
Balance as at 30 June 2025		10,000,000,000	16,293,799,364	(343,626,150)	(441,382,856,046)	-	(38,967,250)	35,426,905,735	(380,044,744,347)

The notes on pages 13 to 123 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 2025
(In Ethiopian Birr)

	Note	30 June 2025	30 June 2024
Cash flows from operating activities:
Operating surplus/Loss for the year		(428,561,066,998)	(10,512,396,128)
Changes in Impairment of loans and advances	8(e),9, 15	(815,607,633)	691,015,146
Depreciation and amortization	13, 14, 16	129,546,238	102,418,314
Net interest income	4	(22,468,750,564)	(18,724,455,058)
Dividend income	7	(124,156,095)	(35,852,659)
Interest paid on lease obligation	16	4,293,413	376,937
Loss/ (Gain) on disposal of property, plant, and equipment	13	436,236	1,294,941
Loss on inventory write down	11	16,860,394,874	78,942,028
Net Unrealized foreign exchange (gains)/losses	8(f)	445,232,054,700	38,136,853,903
		10,257,144,171	9,738,197,424
Changes in working capital:
Loans to government banks and commercial banks	9 (b, c, g)	31,894,891,175	5,537,874,737
Other assets	15	(40,020,202,130)	617,299,750
Deposits due from foreign entities - central banks and commercial banks	9(c,d)	(31,240,949,225)	(1,786,108,060)
Currency in circulation	21	85,702,611,731	2,980,214,577
Due to International Monetary Fund (IMF)	18	312,579,055,327	(9,336,796,780)
Due to International financial institutions	19	(900,278)	25,984,656
Due to other institutions	20	310,761,100,948	120,725,389,051
Deposits due to local financial institutions, government, and government institutions	17	396,975,600,936	(7,621,357,668)
Gold commodity	11	(105,338,482,162)	(125,007,129)
Due from Government of Ethiopia	9 (a)	(49,570,628,132)	(100,602,039,944)
Provisions	22	4,406,820	3,046,133
Deferred revenue	23 (d)	4,598,022	(486,013)
Employee benefits	25	64,932,155	64,239,540
Other liabilities	26	(21,737,220,281)	22,412,480,687
Interest income received		45,767,623,075	27,701,394,719
Interest expense paid		(15,092,556,497)	(7,403,242,024)
Net cash provided by operating activities		931,011,025,655	62,931,083,606
Cash flows from investing activities:
Increase of ROU assets	16	(130,476,714)	(4,062,894)
Dividends received	7	124,156,095	35,852,659
Increase in equity investment & IMF quota*	10	(111,823,300)	(30,723,355)
Acquisition of properties and equipment	13	(1,526,245,373)	(690,545,287)
Net cash used in investing activities		(1,644,389,292)	(689,478,877)
Cash flows from financing activities:
Payments on finance lease obligations	16	(24,988,320)	(1,333,277)
(Increase)/decrease in lease measurement	16	130,428,462	3,759,782
Net cash from financing activities		105,440,142	2,426,505

Increase (decrease) in cash and cash equivalents		929,472,076,505	62,244,031,234
Cash and cash equivalents at beginning of period	9 (f)	58,870,096,410	34,762,919,079
Effect of foreign exchange rate changes on cash and cash equivalents	8(f)	(445,232,054,700)	(38,136,853,903)
Cash and cash equivalents at end of period	9 (f)	543,110,118,215	58,870,096,410

*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 123 are an integral part of these financial statements.

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==Page 15==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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 (NBE) Proclamation No. 1359/2025 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 428.56 billion for the 2024/2025 financial year. However, in accordance with article 8(4) of the National Bank of Ethiopia Proclamation No. 1359/2025, the Bank transferred its net operating surplus before unrealized gains or losses, amounting to Birr 16.67 billion, to the General Reserve Fund. Such transfer will continue until the General Reserve reaches 5% of the Bank’s monetary liabilities, as prescribed under the Proclamation. As a result, the General Reserve reflected a positive balance of Birr 16.3 billion as at 30 June 2025, compared to a negative balance of Birr 0.4 billion in the prior year.

The net operating loss for 2024/2025 financial year was primarily attributable to unrealized net foreign exchange losses arising from the translation of the Bank’s foreign currency assets and liabilities following exchange rate realignment. In accordance with article 8(4) of the Proclamation, these unrealized net foreign exchange losses were transferred to revaluation reserve.

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 income to cover the costs associated with monetary policy operations. In this context, the bank generated adequate realized income in the financial year to cover the costs associated with the discharge of its core mandates. Moreover, the Bank is conducting a comprehensive capital assessment and policy solvency study to evaluate the adequacy of its capital in supporting its mandate and to identify any measures to safeguard its financial sustainability during and after the reform period.

Given the expectation of more favorable macroeconomic conditions, arising from ongoing and wide-ranging policy reforms, the Directors believe that the risk to the Bank’s ability to generate sufficient income to sustain its monetary policy operations is minimal.

In addition, Management has assessed the impact of the National Bank of Ethiopia Proclamation No. 1359/2025 on the Bank’s solvency. Based on this assessment, management believes that the provisions under Article 8 of the Proclamation significantly enhance the policy solvency of the Bank. Article 8, Sub-article 1, establishes the authorized capital of the Bank at Birr 20 billion, of which Birr 10 billion is paid-up capital. Furthermore, Article 8, Sub-article 4(a), stipulates that unrealized gains shall not be distributed but shall be transferred to the revaluation reserve. In addition, the General Reserve Fund is required to be maintained at 5% of the Bank’s monetary liabilities, and no profit distribution shall occur until this threshold is achieved.

These provisions are expected to strengthen the Bank’s capital base, enhance its loss-absorption capacity, and contribute positively to its policy solvency.
Based on the foregoing, the Directors have a reasonable expectation that these measures will support the Bank’s continued operational effectiveness and long-term sustainability.

Accordingly, the financial statements of the Bank have been prepared on a going-concern basis.

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==Page 16==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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 Proclamation No. 1359/2025.

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 2025.

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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==Page 17==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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.

Moreover, According to data in the World Economic Outlook (WEO) report issued by the International Monetary Fund (IMF) in April 2025, Ethiopia is no more considered as hyperinflation economy.

Therefore, the requirements of IAS 29 are not applicable for financial reporting for the year ended 30 June 2025.

On 30 December 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:

Financial instruments measured at amortised cost and at fair value; and
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:

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==Page 18==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

2. Basis of preparation (Continued)

(e) Use of judgments and estimates (Continued) 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;

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

Estimates on uncertainties and assumptions

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 2025 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 (e) - Leases; whether a contract contains a lease.
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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==Page 19==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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 initially 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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==Page 20==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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 day 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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==Page 21==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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 considered 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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==Page 22==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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 costs (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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==Page 23==

National Bank of Ethiopia
Notes to the Financial Statements
For the year ended 30 June 2025
(In Ethiopian Birr)

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.

Lineage: In force