ZamZam Bank S.C., the pioneering Islamic financial institution, has charted a course from turbulent financial waters to profitability, marking a significant turnaround in its operations. Revealed during a recent shareholder meeting at the Millennium Hall, company directors and executives spoke of the Bank’s resilience in the face of economic adversities and its strategic insight in navigating the unique landscape of Islamic banking.

Nasir Dino (PhD), chairman of the Board, and Melika Bedri, the Bank’s President, presented these upbeat financial results before thousands of shareholders, reflecting on the Bank’s journey since its inception. ZamZam Bank, which had weathered a loss of 145.42 million Br in its first year, has reversed its fortunes, posting a net profit of 24.1 million Br. The shift is primarily attributed to the Bank’s strategies for boosting its income through financing and investment activities.

ZamZam’s aggressive expansion strategy, encompassing the opening of 35 new branches within the year, played a crucial role in its financial turnaround. The expansion resulted in a significant increase in income from financing and investment activities, soaring to 337.57 million Br, up from 6.85 million Br in the previous year. According to company executives, this growth trajectory highlights the Bank’s robust approach to market penetration and customer reach.

Running the branch in Haji Ture Building at the heart of Merkato, which averages 14,000 customers annually, Yesun Taye attributed the increased earnings to expanding branches across the country.

"Businesspeople across the regional states have used our branches well," he told Fortune.

Nasir, a long-time proponent of Islamic banking in Ethiopia, emphasised the Bank’s success despite global and domestic economic challenges. He assured shareholders of prospective profit-sharing in the coming years, signalling confidence in ZamZam’s continued growth. Nasir unveiled plans for constructing ZamZam’s headquarters on a 4,135sqm plot in Addis Abeba financial district.

However, financial analysts like Abdulmenan Mohammed (PhD) caution about the rising operational cost, a byproduct of the Bank’s rapid expansion. He noted wages and benefits have tripled to 295.96 million Br, and general administration expenses more than doubled to 196.71 million Br, calling for strategic financial management to sustain the growth momentum in the forthcoming years.

Binyam Tesfaye, the executive assistant director for the President of the Bank, attributed the profit to prudent loan portfolio management, strategic marketing, and effective cost management, despite the complexities of a Sharia-compliant financial model.

"We have optimised our expense management," he told Fortune.

ZamZam’s total assets have witnessed a substantial increase of 137.3pc to 7.49 billion Br, indicating robust growth and a solid financial position. The Bank has also significantly increased its disbursement of interest-free financing, including profit receivable on Murabaha, reaching 4.34 billion Br, a fourfold increase from the previous year. The Mudarabah investment scheme, a profit-sharing arrangement with depositors instead of traditional interest, has dramatically increased to 8.07 million Br from 338,300 Br in the previous year.