Daniel studied undergraduate business managment and completed post-graduate studies in business administration, at Addis Abeba University. He embarked on a career in finance after joining the state-owned Commercial Bank of Ethiopia (CBE) in 2003 as a junior officer. Subsequently, he was assigned to lead a team for credit risk managment. After a decade with the state-owned financial behemoth, he joined Lion Bank in late 2014.

Liquidity appears solid at Lion Bank, which held 6.35 billion Br in cash and balances at other banks, alongside 2.71 billion Br in T-bill investments. Daniel viewed this as a prudent hedge against shocks, consistent with the Bank’s reluctance to take on excessive risk. The economy still faces potential pitfalls, as the cost of living remains high.

On the cost front, expenses soared to 4.7 billion Br, a trend consistent with what is observed across the industry. Interest expenses climbed by 9.1pc to 2.15 billion Br, wages and staff benefits surged by 72pc to 1.64 billion Br, and other operating costs saw an increase of 58.5pc to 889.11 million Br. Loans represented 70.76pc of Lion Bank’s assets, unveiling its reliance on lending to generate interest income. The net interest expense was nearly half the operating costs, which calls for cheaper funds. The 35.6 billion Br deposit base translated to an average of 116.41 million Br a branch, which may climb if digital platforms relieve the Bank’s dependence on bricks-and-mortar expansion.

Personnel and administrative expenses account for over half of total costs, leaving profit per employee at 147,740 Br, half the amount some of its peers achieved. Analysts believe digitisation could lift this metric, as technology allows the Bank to serve more clients without proportionate increases in headcount. Telecom-led payment solutions are gaining traction, potentially diverting deposits from banks. Regulators encourage banks to reach underserved rural markets, which can raise overhead unless balanced by online services that reduce physical footprints.

The Bank added 310,000 accounts over the past year, pushing its customer base above two million. Digital channels grew as well, with 998,000 customers now using mobile, card, or internet banking.

While the President pledged to reduce the cost of funds by expanding digitisation and consolidating branches, he also defended growing staff spending.

“Those were years of survival,” he said. “We established a strong structure and needed to align human resources to bear its weight.”

Lion Bank recorded 788.17 million Br in net profit during the financial year, adding 18 branches to its network of 306. Full-fledged interest-free banking branches were added in preferred areas while expanding to all regional states.

Medhane Kidane manages a branch in Yeka District. He has been running the branch for three years and attributed its boosted performance to teamwork and communication.

“We planned to utilise resources, attract new ones, and retain them,” he told Fortune.

According to Lion Bank's Board Chairperson, Alem Asfaw, the School Pay, SACCO systems, and the Alegnta Micro Credit service, as well as partnerships with Ethio telecom, Safaricom, and Santmpay, made financial services more accessible. Daniel called technology “fundamental” and disclosed plans to roll out a new product in April.

The Bank's paid-up capital rose by 16.3pc to 3.06 billion Br, though the capital adequacy ratio slipped from 11.8pc, dropping by 0.6 percentage points. Its asset-to-equity ratio was 8.45, which fuelled an 18.47pc return on equity. It also maintained a capital buffer of 11.83pc relative to total assets, in line with regulators’ heightened focus on capital adequacy. Private banks average 6.7 billion Br in paid-up capital, revealing Lion Bank's lag behind but planned to catch up by 2028. Shareholders intend to boost capital to 10 billion Br over the next few years, partly in response to regulatory pressure.

“We took a lot of hits,” said longtime shareholder, Yonathan Tesfayohannes. “I don’t possess expertise but I would appreciate increased returns.”

Yonathan is also apprehensive of potential discussions about mergers and acquisitions of smaller banks, signalling a climate of possible consolidation in the industry.

The private banking industry's total assets increased by 28pc last year to 3.3 trillion Br, while Lion Bank’s assets grew 21pc. The CBE remained a heavyweight, recently reporting a 47.9pc jump in total assets, maintaining a dominant share of the industry's capital. Yet, private banks such as Awash, Dashen, Abyssinia, Wegagen and Zemen have made strides, raising equity and widening their loan books. As competition ramps up, both from established giants and from smaller and nimble entrants, Lion Bank's executives emphasised that lessons from the crisis have not been forgotten.

Daniel hopes that healthy capital buffer, diversified loan book, and a renewed push into areas like e-banking position the Bank to thrive, even if risks continue to surface.

PUBLISHED ON Mar 09, 2025 [ VOL 25 , NO 1297]

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