Awash Bank Boosts Salary after Record Profit

But some employees feel it's not enough in light of the bank's successes

Awash International Bank S.C. has raised its salaries by an average of 35pc following the results of a study by consulting firm KPMG.

Entry level employees have been bumped up to around 5,600 Br a month from around 4,000 Br. Branch managers at 4th grade branches have been bumped up by 56pc to 16,845 Br from around 10,815 Br. The figure might reach around 22,000 Br for the highest grade branches. Directors receive from 29,000 Br to 37,000 Br per month, depending on how long they have been on the job. While at Abyssinia Bank, directors earn from 37,000 to 42,000 Br.

“I believe that the bank has one of the most competitive salaries at the moment,” said Tsehay Shiferaw, CEO of the bank, who is not included in the latest salary raise.

However, the level of the salary raise is causing some controversy amongst the employees of the bank. The bank’s impressive performance during the last fiscal year made it the most profitable bank in Ethiopia. However, the benefits of the bank’s success are not being seen at the employee level, according to some bank employees.

“Most of the employees feel that the bank isn’t keeping up with market trends,” said a clerk at Awash Bank. “The bank has become successful because of the employees and we’re not seeing as much benefit from that as we should be.”

Abyssinia bank’s entry level clerks, for example, receive about 7000 Br a month, which is 25pc higher than of Awash.

However, the bank is doing everything it can to address employee concerns, according to Tsehay Shiferaw.

Last year, Awash bank amassed over 743.7 million Br of net profit, which is 15pc higher than the preceding fiscal year. Following this, the bank issued about two and a half months salary in bonuses.

Dashen Bank issued one month’s salary in bonus. Dashen’s net profit had registered at 2pc lower than Awash.

Although the adjustment was planned for the previous fiscal year, Awash wasn’t able to implement them when it wanted to.

“The results of the study were delayed from KPMG’s side, so we weren’t able to adjust base salaries last fiscal year. We simply increased salaries as we normally do annually,” said a senior executive at the bank.

The new salary adjustment system is based on the reorganised employment levels for the bank. There are 20 levels, from level one employees (security and custodial staff) to level 20 (vice presidents). There were formerly 21 levels for employees of the bank. This reduction has caused unhappiness amongst the bank’s lower level employees.

“Two people who started at the same time, with the same experience have ended up at two different salary scales now. Many people think it is unfair,” a bank employee told Fortune.

The bank’s management doesn’t see it the same way.

“If someone is moved up to a new scale, it is because the management has seen potential in them to take on greater responsibility,” said the CEO.

As of August, 2016, Abyssinia Bank raised the salary of its president by 50pc to 100,000 Br, placing it on top of the industry curve.

The figure is 25pc higher than Tsehay’s salary, who earns 80,000 Br per month but Dashen Bank’s president earns about 60,000 Br per month.

The study by KPMG is part of the bank’s “Transforming AIB 2025” vision. It addressed all parts of the bank’s operations, including human resources management and optimization.

The bank has set up an independent committee to hear employee grievances about the new salary adjustments. However, the committee isn’t doing enough, according to some employees.

“It’s just talking,” said one senior clerk with the bank. “There haven’t been any attempts to actually address the problems that the employees are bringing up.”

These problems include the lack of housing and transportation allowance, the bank’s employees tell Fortune.

“At Abyssinia Bank for example, they get a transportation allowance of 800 Br. At Awash we only get 500Br. That’s fine in the less urban areas of the country because transportation is cheaper, but in places like Addis Abeba, it’s just not enough,” the employee commented.

However, the new salary structure means that the bank will need a 120 million Br cushion to protect its profits at the end of this fiscal year.

During the recently ended fiscal year, Awash expended over 615.3 million Br to its employees, a 32pc increase compared to 2014/15. The figure represents nearly 60pc of the bank’s aggregate expense.

Awash Bank institutes sweeping salary adjustments every two or three years. Salary increments are given annually.

In addition to Awash and Abyssinia, Bunna Bank, Berhan Bank, and the Cooperative Bank of Oromia are also among the banks that delighted their employees with a salary raise, with the aim of staff retention.

Established 22 years ago, Awash currently has over 6,000 employees. It is the first bank in the country to attain the two billion paid up capital requirement, set by the National Bank of Ethiopia.


Published on Dec 06,2016 [ Vol 17 ,No 866]



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