Abyssinia Bank - Demand Evaluation Model

St.  Mary’s University

School of Graduate Studies

Department Of Marketing Management

         Demand evaluation model

       (In the case of Abyssinia Bank)

Prepared by – Nurhussen Mohammed

                        SGS 073/2007A

                                                    Submitted to: (PhD)-MESFIN WORKENEHE

                                                                                                           DEC, 2015

1.1Backgrounds of the organization

February 15, 1906 stated the beginning of Banking in Ethiopia when the First Bank of Ethiopia saw in agurated by Emperor Minilik II. It was a private Bank whose shares were sold in Addis Ababa, New York, Paris London and Vienna. One of the projects financed by the bank in its early years was the Franco Ethiopian railway which reached in Addis Ababa in 1917.

In 1931 Emperor Haileselasie introduced reforms into the Banking system and the Bank of Abyssinia become the Bank of Ethiopia, A fully Government Bank owned bank  providing central and commercial Banking services with Italian innovation in 1935 came the Demise of one of earliest initiatives in African Banking. On 15, 1996 ninety years to the day after the establishment of the first Bank of Abyssinia, a new privately owned Bank with his historic name. But otherwise not connected with the older Bank, came into existence.

The subscribed capital of the new Bank of Abyssinia (BOA) was Birr 25 Million and its Authorized Capital Birr 50 Million with 131 Shareholders all Ethiopians and 32 Work force.

BOA currently offers services like Current (checking) accounts; saving accounts, Time deposits, NR/NT accounts, overdraft Facilities, and Term loans, merchandise Loans, Letter of Credit, and Guarantees. Currently BOA has 1309 Shareholders. The Bank’s authorized capital 630 millions, Its subscribed Capital 315 Millions and paid up capital 315millions.

The total staff strength of the Bank as of June 2009/10 has reached 1,824 increased by 19.8%. Over the preceding fiscal year and over 225,600 customers and an overall deposit of birr 5.14 billion and a profit of 140.58 million during the fiscal year of 2010 and a total of 48 Branches out of which 20 are outside the Addis Ababa and 28 are in Addis Ababa. (BOA annual Report)

The liquidity position of the Bank is strong. The liquidity asset of the Bank in relation to current liabilities stood at 51.1% at the end of 2009/2010 which is substantially higher than the minimum of 25% set by the National Bank of Ethiopia (NBE). Furthermore, the ratio of capital to risk weighted asset of Bank stood at 13.7% at the end of the fiscal year 2008/2009 of compared to the required minimum capital adequacy ratio of 8% set bay the regulator Authority. (BOA Annual Report).

The mission of the Bank of Abyssinia is to provide domestic and international Banking service through an innovative and optimal utilization of state of the art technology as well as its human and another resource should be recognized as a quality focused result to tent financially sound, and socially responsible bank. That being its mission the bank is committed, among others to the following (BOA Annual Report).

• Satisfying the finical service needs of its customers in according with it career development of employees and encouraging them to fully realize their potentialities by rewarding all outstanding performance, knowing full well that its employees are its main assets.
• Generating to the national development effort in general and to the full growth of the fledging private sector in Ethiopia in particular, and
• Forgiving mutually beneficial relation with all its associates in the country and abroad.
• Integrity, honesty, Loyalty and aiding by an ethical code of conduct.
• Ensuring full customer satisfaction.
• An answering commitment to quality and innovation.

1-THE TOTAL MARKET DEMAND

1.1-DEPOSIT

The deposit mobilization effort of the bank showed encouraging results in the fiscal year 2014/15 and thus the total deposit mobilized by the bank has reached birr 11.12 billion ,registering  an absolute growth of birr 2.02 billion or 22.2% as compared to the total deposit balance of the previous fiscal year

Moreover, growthwas observed in all types of deposit. In this respect saving , demand, and time deposit registered birr 1.25 billion (19.6%), birr 718 million  (38.8%) and Birr 51 million (6%) growth , respectively as compared  to the preceding fiscal year.

Apart from this, the number of deposit account holders of the bank went up by 64,746(15.7%) and reached 478,436 when compared against last year’s position of 413,690 during the review period , the share for saving , demand  and time deposit from total outstanding  deposit  stood  68.84%, 23.12%, and 8.04% respectively.

1.2-Loan and advances

The total outstanding loans and advances of the bank in the fiscal year 2014/18 stood at birr 5.99 billion, surpassing the preceding fiscal year’s balances by birr 844 million (16.4%). The increase in total outstanding loans from the preceding year was mainly registered from overdraft with birr 599 million (80.2%), term loan with birr 118 million (3%) and advances with birr 126 million (23.6%)

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