Awash International Bank (AIB) has continued to consolidate its position as a formidable force, setting a new benchmark for its peers in the banking industry. Its performance cements Awash Bank's position at the pinnacle of the financial sector. Over the past few years, the Bank has not only maintained but significantly enhanced its growth path, defying domestic adversities.

With a tremendous increase of 30.9pc in net profits, Awash Bank’s earnings soared to an impressive 6.99 billion Br for the fiscal year 2022/23. The growth outshined competitors such as Dashen, Hibret, and Abyssina, which reported net profits of 3.56 billion Br, 2.29 billion Br, and 3.87 billion Br, respectively.

The Bank's President, Tsehaye Shiferaw, attributed this to the infusion of fresh capital, which saw its paid-up capital soar by 42.4pc to 14.65 billion Br, a figure nearly triple the regulatory minimum set by the National Bank of Ethiopia (NBE) for 2026. Such financial manoeuvring not only fortified Awash’s capital base but also seemingly reassured its shareholders about the Bank's growth potential, according to Abdulmenan Mohammed (PhD), a London-based financial analyst.

He lauded Awash's profit as "phenomenal," a sentiment echoed in the modest yet significant rise in Earnings Per Share (EPS) by seven Birr to 577 Br. The Bank directors and executives have pleased their shareholders by posting EPS of 57pc, one of the highest among the private banks but at par with the Bank of Abyssinia, while Birhan Bank reported the lowest at 15.6pc.

"Shareholders have every reason to be delighted with the Bank's performance," he said, acknowledging the strategic moves that have led to these outcomes.

The Bank’s revenue sources have been diverse, contributing to its robust bottom line. Interest income and fees, as well as commissions, played a significant role. Interest on loans, advances, central bank bonds, and other deposits surged by 54.9pc to Br 21.93 billion Br, while fees and commissions increased by 13.1pc to 5.61 billion Br, reflecting on the Bank's operational efficiency and its executives' ability to capitalise on market opportunities and diversify income streams, according to industry analysts.

Awash Bank led the pack among its peers, recording a 25.6pc increase in loan disbursement to 159.37 billion Br, more than double the previous year's average and the highest among seven of its closest competitors. However, the Bank's journey has not been devoid of challenges.

Gure Kumsa, the Board's chairman, told shareholders about several obstacles at a recent shareholders' meeting.

The key challenges the Bank confronted were global supply-side issues, a rise in food prices, domestic conflicts, and drought. He brought to their attention a brewing tax dispute with the Ministry of Revenues over retrospective profit tax claims on dividends previously used to pay up subscribed capital. The litigation with federal tax authorities poses a potential risk to the Bank's financial stability.

"Billions are being asked," Gure disclosed to shareholders.

Awash Bank has significantly reduced its provisions for loan impairments, underscoring the strength of its loan recovery efforts. The Bank's provision for impairments plummeted by 71.7pc to 242.97 million Br, a figure that notably undercut the average set by its eight peers and was lower compared to Bank of Abyssinia’s 960 million Br and Dashen Bank’s 497.6 million Br. However, it was slightly above Hibret Bank's 103 million Br set aside for provisions.

Industry observers, including Abdulmenan, have praised Awash Bank's strategic handling of non-performing loans (NPLs). The Bank's NPL ratio, which has dipped below one percent, starkly contrasted with the international standard of five percent, indicating a robust credit evaluation work and effective loan recovery efforts.

“The reduction in provision for impairment of loans and other assets is praiseworthy,” Abdulmenan told Fortune.

The financial feat is particularly commendable, given the broader challenges in the banking industry.

"This is a significant achievement," Abdulmenan said. "It demonstrated the Bank's stringent credit evaluation processes and effective loan recovery mechanisms."

Samuel Kenu, an accountant at Awash’s Gofa Branch, shared this view on the Bank's performance. While he applauded the Bank's overall financial success, he showed reservations over its lag in the digital finance landscape. He believes the Bank needs to focus more on this area to maintain its competitive edge.