Hibret Bank’s last financial year is a paradox of scale without reward. By conventional measures of banking growth, the year looked strong. The balance sheet expanded, revenues expanded, and customer activity increased, yet the Bank ended with a net profit that plummeted substantially.

Management attributed the tumble to a one-off exchange-rate liberalisation that re-priced foreign-currency positions, amplified by a heavy tax charge that absorbed what remained of earnings. The Bank's profit of 23.52 million Br for the 2024/25 financial year fell from 2.3 billion Br a year earlier.

Mesfin Tessema, a board chairman since December last year, framed the year as a “demanding macroeconomic climate” and linked the loss to the mismatch between the Bank’s foreign-currency assets and liabilities.

However, total assets surged by 18pc to 113.93 billion Br. Loans and advances, including interest-free banking (IFB) financing, a.k.a Sharia-compliant banking, reached 79.33 billion Br, up by 10.44 billion Br. Deposits climbed to 92.68 billion Br, with IFB deposits also rising to 5.57 billion Br. Despite the setbacks on the forex front and heavy tax burden, Hibret Bank was consolidating its franchise, deepening its loan books and strengthening its funding base.

Capital and liquidity, though tested, remained above regulatory floors. The capital adequacy ratio (CAR) was 11.71pc, above the eight percent regulatory threshold. Cash and bank balances increased to 16.45 billion Br, lifting their share of total assets to 14.4pc from 12.8pc. Cash and bank balances of 16.4 billion Br, in addition to investment securities of about 9.18 billion Br, provided roughly 25.6 billion Br of liquid cover against short-dated liabilities. The gross loan-to-deposit ratio stood around 85.6pc on combined deposits, about 93.1pc against deposits alone, levels that unveiled active use of the deposit base while leaving some buffer.

Revenue tracked this expansion as total income jumped to 16.74 billion Br. Interest income from loans and advances remained the main driver at 12.97 billion Br, while non-financial intermediation income, mainly net fees and commissions, jumped to 3.14 billion Br, pointing to rising transactional activities. Fees, commissions and other income together show a Bank doing more of the core business of mobilising deposits, extending credit and charging for services.

The positive narrative turned with the monetary policy change. Following the liberalisation of the foreign currency regime in August 2024, Hibret Bank recorded a forex revaluation loss of 3.76 billion Br, a single charge large enough to overwhelm what would otherwise have been a strong revenue year. The Bank’s board and senior executives attributed the earnings tumble to a “foreign currency revaluation loss” tied to a mismatch between foreign-currency assets and liabilities under the new regime, and to a net loss on foreign exchange linked to the revaluation of forex deposits and import-finance exposures.

According to analysts, the balance-sheet structure, rather than day-to-day operations, became the main transmission channel for policy risk.

Hibret Bank was not alone in such a predicament. Nib Bank closed the year with a net loss of 2.9 billion Br, reversing a profit of 957 million Br the previous year, while Tsedey Bank posted a loss of 2.13 billion Br.

“These headwinds placed considerable strain," Mesfin said in the statement for shareholders met at the Sheraton Addis in December last year, "requiring banks like ours to adapt swiftly, strengthen risk management, and recalibrate strategies."

However, Hibret Bank’s losses were 29.7pc higher than those of these banks, even though it still made a small after-tax profit. No dividend was declared, breaking with a record that shareholders had come to see as dependable. Incorporated in 1998 with 21.1 million Br paid-up capital raised from 352 shareholders, and among the first-generation private banks, Hibret Bank has historically posted earnings per share (EPS) in the range of 25pc to 30pc.

The loss to shareholders is most evident in EPS, which collapsed to 3.07 Br from 383.10 Br, a fall of about 99.2pc. In the same year, Zemen Bank paid nearly 683 Br a share, up from 376 Br a year earlier, revealing how divergent outcomes could be within the same macroeconomic setting.

For a founding shareholder, former board member and chairman Zafu Eyessuswork Zafu, the justification could not rest on policy alone. He accepted the link to macroeconomic reforms but argued that managing foreign-exchange exposure and policy risk is a management task, and that the previous leadership should be held accountable.

The change of guard at the senior executive level manifested this turbulence.

Turnover at the helm of the Bank added to uncertainty. Hibret Bank was led by its fifth president, Melaku Kebede, who stepped down in August after nearly four years in the role and earlier service as vice president at Zemen and Hibret banks. For the subsequent eight months, Tsigereda Tesfaye served as acting president. In August 2025, after the reporting period, the board appointed Negusu Gebregziabher, a former president of Lion International Bank and senior executive at the Commercial Bank of Ethiopia (CBE) and Bank of Abyssinia, signalling a reset in executive leadership.

Beneath the forex revaluation hit, the Bank's core intermediation engine remained active. Net interest income was 6.9 billion Br, built from interest income of 12.97 billion Br and interest expense of 5.97 billion Br. Net fees income of 3.14 billion Br and other operating income of 227.2 million Br lifted total operating income to about 10.3 billion Br, with roughly two-thirds from interest and a third from fees.