Fortune News | Feb 11,2023
Siinqee Bank’s performance in its latest year reads like the arrival notice of a four-year-old commercial bank.
Born from microfinance and transformed into commercial banking in April 2022, it ended the 2024/25 financial year in the upper tier of the domestic banking industry.
According to Tolessa Gedefa, chairperson of the Board, it was a year of “significant milestones.”
“Despite being a relatively new entrant in the banking sector, the Bank outperformed many established private commercial banks in the country,” he said.
Founding President Neway Megersa echoed the sentiment, characterising the year as "one of broad-based growth."
“We’ve emerged as one of the fastest-growing banks in the country’s banking industry, registering strong growth in the majority of key performance metrics,” he said.
The numbers demonstrated the scale of the change.
Siinqee Bank ended the year with a markedly larger balance sheet (120.81 billion Br in assets), a deeper deposit base (102.52 billion Br) and an expanded loan book (56.42 billion Br), signalling one of the fastest growth trajectories among its peers.
Its profit before tax surged sharply, projecting a dramatic turnaround in earnings power, while revenue (12.7 billion Br) more than doubled on the back of stronger business activity.
Although costs (8.94 billion Br) also increased, they grew at a slower pace than income, allowing the Bank to convert rapid expansion into a much stronger bottom line. Earnings per share (EPS) climbed to 402 Br from 65 Br. Another astounding result was the total comprehensive income, which increased to 3.40 billion Br from 503.6 million Br.
However, a little over half of its total profit came from net foreign-exchange income and reversal of loan impairment provisions, sources that may not repeat. The Bank generated 661.7 million Br from impairment reversals. Much foreign-exchange income, 135.8 million dollars, came from currency revaluation rather than core transaction banking.
Abdulmenan Mohammed (PhD) is a financial analyst based in London, a close observer of the financial sector for over two decades.
Warned Abdulmenan: “The growth of the coming year’s income may not be like the reported year.”
Interest income expanded by 66pc to 8.3 billion Br, implying the Bank generated about five billion Birr in the previous year. Interest expense grew at a slower pace, increasing by 57pc to 2.07 billion Br. This widened net interest income to 6.23 billion Br from 3.70 billion Br, a 68.4pc increase, unveiling that the Bank preserved its core lending margin despite higher funding costs.
Non-interest income showed even sharper momentum. Fee and commission income climbed by 207.1pc to 501.04 million Br, while service charges surged by 873.3pc to 1.46 billion Br, signalling a substantial expansion in transaction-based earnings and customer service activity.
Neway Megersa, Founding President
The result was a dramatic jump in profitability. Net profit reached 3.35 billion Br, up about 544pc from the previous year. This was driven not only by stronger interest income but also by a pronounced shift in the Bank’s income mix toward fees and service-related revenues.
The Bank’s widening profitability was built not only on a rapidly expanding balance sheet, but also of rising leverage. Its strong return on equity was not merely the product of better margins but amplified by a larger asset base funded with proportionately less capital.
Capital-to-asset fell to 10.2pc from 15.1pc, and asset-to-equity rose to 9.8 times from 6.6 times. The capital base continued to grow, helped by paid-up capital of 8.34 billion Br, 70pc owned by public enterprises under the Oromia Regional State. Retained earnings, yet it did not keep pace with the scale of asset expansion.
As a result, Siinqee Bank entered a more leveraged phase of growth. Its capital cushion, while larger in absolute terms, became thinner relative to its size.
According to financial analysts, the shift signalled a Bank moving aggressively to convert capital into assets, deposits and income, but it also placed greater weight on credit discipline and liquidity management.
The funding side offers a more reassuring picture. Siinqee Bank’s deposit growth was anchored less in expensive fixed-term money than in savings and demand accounts, giving the bank a relatively favourable funding mix.
The rise in deposits (54.9 billion Br) appeared to have been supported by a broader branch network, digital banking channels and the spread of Siinqee IHSAN. This suggests that the Bank’s growth was not simply financed through costly funding but built through a broader retail and institutional deposit franchise.
That makes the performance impressive, but not without caveats.
Fresh disbursements reached nearly 49.9 billion Br, pushing the portfolio to 56.42 billion Br. This appeared unusual because domestic banks were operating under the National Bank of Ethiopia’s (NBE) 18pc annual credit growth ceiling.
According to Abdulmenan, such expansion would raise questions about credit quality, portfolio oversight and risk management.
“The scale of Siinqee’s loan expansion is highly unusual,” he said. “It appears the Bank is all over the place rather than extending loans.”
However, the loan book mirrored Siinqee Bank’s origins more than a conventional bank’s template.
Agriculture accounted for nearly half the portfolio with about 28.14 billion Br.
“It massively increased the loans disbursed to the sector,” Abdulmenan said. “That should be alarming,”
Domestic trade and services followed by international trade, manufacturing, building and construction, and hotel and tourism, claiming only 1.9pc of total loans. The allocation linked Siinqee Bank to agriculture, microfinance, women, youth and the underserved communities. But, this also exposes borrowers to weather, inflation, weak markets, input shortages, commodity volatility, seasonal repayment and instability.
Neway defended the Bank’s position on the account of supporting agricultural transformation and financial inclusion policy.
Microfinance remains Siinqee Bank’s advantage and its largest credit risk exposure. The Bank financed 331,705 borrowers through group- and agriculture-based individual loans. By June 2025, microfinance borrowers had reached over half a million, accounting for 97.54pc of the total.
Among microfinance-origin banks, Siinqee Bank was in another class. It was not merely ahead of its microfinance-legacy peers such as Shaballe, Sidama and Siket banks. It had moved into a balance-sheet category closer to that of mid-sized commercial banks, while its peers remain institutionally smaller, more regionally concentrated, and less deposit-rich.
Shabelle’s loans accounted for about 76.2pc of deposits, revealing a more aggressive conversion of deposits into credit, while Siket’s capital-to-asset ratio was a striking 48.4pc, uncovering either a heavily capitalised balance sheet or underleveraged intermediation. Sidama’s gross profit represented 21.2pc of revenue, giving it a relatively strong earnings conversion rate despite its smaller balance sheet.
Siinqee Bank’s advantage lay overwhelmingly in scale and deposit mobilisation. Outstanding microfinance loans reached 35.27 billion Br, comprising 62.5pc of its book.
Its asset base, at around 120 billion Br, was nearly 20 times Shabelle’s, 22 times Sidama’s and more than six times Siket Bank’s. Its deposit stock, at about 102.5 billion Br, was even more dominant, 45 times Shabelle’s, 28 times Sidama’s and 13.5 times Siket’s.
Nonetheless, non-performing loans (NPLs), at 4.31 billion Br, remained the weak spot in the Bank’s balance sheet. Troubled exposures have grown large enough to test the strength of its risk controls, while provisions appeared thin against the scale of loans already under stress.
The Bank’s sizable collateral cushion offered some comfort, but collateral is not liquidity. Analysts warned that turning pledged assets into recoveries can be slow, costly and uncertain. The write-off of 1.3 billion Br in legacy interest income from its microfinance years was a necessary act of housekeeping. It also showed that part of the Bank’s past earnings story had rested on loans that were no longer producing real cash.
Liquidity looked comfortable in the near term, but the picture is less convincing further out. The Bank held a large cash buffer (equal to 30.7pc of assets and roughly 36pc of deposits) and has kept lending well below the pace of deposit mobilisation, a sign of caution. That conservatism gives management room to absorb shocks and meet short-term obligations.
Yet the maturity profile pointed to a structural mismatch. Cash is plentiful today, but longer-dated obligations could strain the Bank unless deposit stability improves or lending is more closely matched to funding.
The cost base tells the story of a young bank still carrying the weight of expansion. Payroll and administrative spending (3.48 billion Br) surged sharply by 61.4pc as the Bank built the staff, branches and systems needed to operate as a commercial bank.
There were early signs that costs are becoming less dominant relative to the size of the business, revealing efficiency gains. With its 11,821-strong workforce, Siinqee Bank remained labour- and overhead-heavy, with personnel and administrative costs accounting for 56.6pc, down from 66.1pc.
“The management of the Bank should take appropriate measures before expenses get out of hand,” Abdulmenan cautioned.
However, Siinqee Bank outpaced its microfinance-legacy peers on the major profitability gauges, even as the peer group posted solid balance-sheet expansion. Peer deposits grew by 33.49pc, while average loan growth stood at 17.4pc, leaving the group with an average loan-to-deposit ratio of 73.48pc.
On a weighted-average basis, peers recorded a net profit margin on assets of 2.1pc, an asset-to-equity multiple of eight times, a capital-to-asset ratio of 12.5pc, profit per employee of 310,655 Br, and deposits per branch of 150.05 million Br.
Siinqee Bank’s gross profit per employee increased to 318,000 Br from 69,000 Br, while average deposit per 588 branches doubled to 174.36 million Br.
Shiferaw Tafa is the operations manager of one of these branches. His observation from managing the Mexico Branch in Addis Abeba is that expansion in the capital remains in demand. Although the Bank’s digital channels are expanding, he saw that many customers still need to use counters and visit branches.
“The growing customer base requires more physical branches to ease congestion and improve access,” he told Fortune.
The Bank’s cardholders expanded by a staggering 411pc to more than 592,000. Mobile banking users increased 351pc to 1.27 million, and internet banking users reached 7,980.
“The Bank is now well-positioned for sustainable growth,” said Neway. “It’s steadily advancing toward its vision of becoming a leader in financial inclusion and transformation.”
Siinqee IHSAN, the interest-free banking arm, expanded through windows at all branches and 17 fully fledged interest-free banking branches. Account holders reached 864,483 after 360,179 customers were added last year, helping the Bank advance 3.1 billion Br in disbursements, a 531pc increase.
Siinqee Bank has moved into the stronger tier of the banking industry, but not without qualifications that should keep shareholders and depositors on their guard.
Its after-tax return on average assets reached 3.72pc, while pre-tax return on assets was 4.17pc. Its return on equity of 35.28pc was also substantially higher than the peer average implied by the industry’s asset-to-equity and profitability metrics. These figures pointed to a bank that is converting growth into profit more effectively than its nearest rivals, using both its balance sheet and shareholder capital with unusual intensity.
Yet the same performance carried signs of caution. Capital adequacy is satisfactory, though thinning. Asset quality is mixed; impairment fell, and management says loan quality improved, but the agriculture concentration, microfinance exposure, and a near-7.6pc Stage 3 NPL require caution.
The Bank’s growth has made it larger and more profitable, but it has also left it with a concentrated loan book, higher leverage, rising costs, and excess liquidity.
However, deposit growth, branch productivity, technology upgrades and board activity revealed an institution trying to keep pace with its own expansion. Siinqee Bank has cash and momentum, but it has to prove that its funding structure, loan quality, and operating discipline can withstand the weight of continued expansion.
The Bank’s leadership called the current financial year a “year of aggregation,” with streamlined operations, improved service quality, market capture, and greater competitiveness.
“We work to be the power of transformation,” Neway told shareholders in a statement published in the Bank’s annual report.
PUBLISHED ON
May 09,2026 [ VOL
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