Ahadu Bank Profits Signal Resilience But Capital Falls Short

Jan 24 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Ahadu Bank ended its latest financial year with an unusual distinction for a young lender. It grew rapidly, earned handsomely, and yet emerged more constrained than reassured. The year was profitable, disciplined, and resilient, but also exposed the hard limits facing late-entrant banks as financial sector reforms accelerate faster than their balance sheets can adapt.

Ahadu Bank closed its most recent financial year not by pursuing breakneck growth, but by focusing on the fundamentals of survival. While its strong earnings, healthy deposit inflows, and solid asset quality provided a foundation for future progress, the unresolved capital shortfall and the liquidity challenges confronting the banking industry defined the financial year 2024/25.

Like many young financial institutions, Ahadu Bank faced a year that tested its ability to adapt. Aggressive expansion was set aside in favour of steady management amid regulatory tightening, unpredictable shifts in foreign-exchange rules, persistent liquidity constraints, and political and economic uncertainty. The Bank's Board Chairman, Anteneh Sebsebie, and its President, Mulugeta Beza, described the period as one of resilience, not acceleration, setting a tone that avoided both pessimism and unwarranted optimism.

“Over the past year, we’ve steered a dynamic social, political, and economic situation with resilience, turning challenges into opportunities and laying a stronger foundation for sustainable growth,” Anteneh wrote in the Bank’s annual report.

The year’s results mirrored this cautious optimism. Progress was real, but so were the Bank’s underlying vulnerabilities. Despite the headwinds, Ahadu Bank delivered a strong topline performance.

Anteneh attributed this to "deliberate" and "disciplined" decisions at the Board level, stating three priorities of strategic clarity, operational discipline, and improved governance. According to the Board Chairman, active oversight, structured processes, and alignment with regulatory expectations and good governance guided the Ahadu Bank's operations.

"Governance reforms, including stronger committee oversight, data-driven decision-making, and accountability at the senior management level, were key to ensuring growth led to sustainable profitability," said Anteneh.

The Board placed a premium on risk management, capital adequacy, asset quality, and regulatory compliance. According to Anteneh, good oversight is not about micromanagement, but about setting clear expectations, targets, performance tracking, and accountability.

"Effective oversight," he said, "enabled the Bank to spot issues early, rather than responding after the fact."

This approach paid off in the numbers. Interest income from loans, advances, and investments jumped by 129.3pc to 852.32 million Br. Net commission and service charges surged by 133.3pc to 905.58 million Br. Gains from foreign exchange dealings jumped by 286pc to 343.74 million Br. The growth across these income streams reflected the Bank’s broader business activity. By the end of June 2025, Ahadu Bank’s total assets had reached 10.1 billion Br, up 56.5pc from a year earlier. Loans and advances climbed by 146.6pc to 4.43 billion Br. Liabilities grew in parallel to 8.55 billion Br, making up 85.1pc of the balance sheet.

Analysts hailed the expansion as impressive, noting that Ahadu Bank appeared unaffected by regulatory lending caps. Deposit mobilisation was also strong, rising by 69pc to 7.88 billion Br, resulting in a 55pc loan-to-deposit ratio. However, Abdulmenan Mohammed (PhD), a financial analyst based in London, noted this was "alarmingly" low and urged the management to deploy deposits more efficiently to improve profitability.

Yet, lending has also expanded, with loans and advances, in addition to 950.2 million Br allocated to mandatory treasury bills. Despite these gains, Ahadu Bank’s market share remained small, limiting its systemic importance and its involvement in key market infrastructure, such as payment settlements or foreign exchange clearing.

Analysts agreed that liquidity and funding risk remained the main vulnerabilities for Ahadu Bank. Deposits accounted for 92.1pc of total liabilities, with savings and demand deposits making up 78pc of that base. Access to wholesale or long-term funding was limited. The Bank’s customer base is young and sensitive to shifts in confidence, a situation made more precarious by the prevailing volatile macroeconomic environment.

The leadership of the Bank conceded in the annual report that forex liberalisation-driven liquidity pressure and Birr depreciation are tightening balance-sheet liquidity.

"Rapid currency depreciation generated profound implications, not only by intensifying liquidity pressures but also by creating a range of operational challenges across the financial sector,” said Anteneh.

Ahadu Bank’s capital grew 5.6pc during the year, but the shortfall remained a pressing concern. Paid-up capital was 1.13 billion Br, well below the five billion Birr statutory minimum required by June this year. The Bank faces a daunting task in raising the balance within the set timeframe. The Board Chairman acknowledged this as a “core vulnerability,” and the President admitted, “low capital limits shock absorption, magnifies liquidity stress, and raises confidence sensitivity.”

“We remain below the minimum statutory requirement," said Anteneh. "Raising capital to the authorised level is fundamental to the Bank’s viability and the preservation of its distinctive identity.”

The admission anchored the year’s results in the context of an expansion far from complete.

Ahadu, a Ge’ez word literally translated to "One", tells its founders' ambition to pioneer a new banking model. It was incorporated in 2021, with a paid-up capital of 564 million Br raised from more than 10,000 founding shareholders. Headquartered in the Sunshine Building on Africa Avenue (Bole Road), the Bank has quickly expanded its branch network and customer base.

Some shareholders, however, remained dissatisfied.

According to Afework Tibebu, a founding shareholder, he has yet to find a reason not to rue his investment in the Bank. He felt the money would have been better placed elsewhere, deepening his dismay not only toward Ahadu Bank but also his holdings in Abay Bank.

Abay Bank consolidated its position as a mid-tier incumbent with a broad branch footprint and a deposit-led balance sheet, translating scale into steady, if not standout, profitability amid rising operating and credit-cost pressures. Ahadu Bank, by contrast, continued to behave like a younger and faster-growing challenger, prioritising asset and loan expansion and capital build-up, which supported headline growth but constrained short-term efficiency and margins.

He claimed that promises such as mortgage financing and vehicle loans were not fulfilled.

“I should have invested elsewhere,” Afework told Fortune.

For him, the results presented at the general assembly, held in November last year at the Millennium Hall on Africa Avenue, were “just numbers,” rather than dividends reaching his pocket.

Profitability was, nonetheless, one of Ahadu Bank’s most encouraging features in its 2024/25 operations.

The Bank generated 2.16 billion Br in income against 1.66 billion Br in operating expenses, resulting in a profit before tax of 502.1 million Br and a net profit of 399.4 million Br. Net profit for the previous year was merely 90.9 million Br. Earnings per share (EPS) jumped to 183 Br, up from 48 Br.

Addressing shareholders at the general assembly, Mulugeta Beza, president of Ahadu Bank, hailed the performance as "remarkable" and credited employees’ dedication, resilience, and teamwork.

Mulugeta, 45, took over as president in July 2025, replacing Sefialem Liben, with Sisay Gebru stepping in as acting president. He brought nearly two decades of commercial banking experience, mostly at the Bank of Abyssinia, where he directed credit underwriting, international banking, and finance and accounting. He had served as chief business officer at Bunna Bank since 2020. He did his postgraduate studies at the International Leadership Institute and his undergraduate studies in accounting and finance, as well as in information systems, at Addis Abeba University.

"Ahadu Bank was committed to adapting, meeting new requirements, and leveraging emerging prospects for sustainable growth," he said in a statement published in the annual report.

However, his management declined to provide further comment beyond official statements.

In the report, Mulugeta cited several regulatory measures that affected operations, including credit caps, changes to the foreign exchange regime, revised banking proclamations, and the mandatory Fayda ID requirement for account opening. While these reforms are designed to strengthen the industry in the long term, they created short-term constraints on liquidity, income, and customer acquisition.

Nonetheless, the Bank posted a return on assets (ROA) of around 3.97pc, above the industry average of 2.1pc. Return on equity (ROE) reached 26.7pc, compared to the industry’s 25.7pc benchmark. The loan-to-deposit ratio (LDR) was 55.1pc, lower than the industry average of 60.6pc. Liquidity seemed ample by some measures, with the ratio of cash and bank balances to deposits at 37.1pc, better than the industry’s average of 24.2pc.

Yet, the structure of the deposit base and loan book reinforced the image of a cautious financial institution. Savings deposits accounted for 51.5pc of the total, demand deposits for 26.7pc, and fixed deposits for 21.8pc. Lending was concentrated in trade, with export and import services making up 57.7pc and domestic trade and services for a further 23.5pc. Construction and manufacturing accounted for under 12pc, while agriculture and consumer lending played only a minor role.

“We’ve taken a cautious credit posture, focused on short-tenor, cash-flow-driven activities rather than long-term project finance,” Mulugeta said.

Anteneh acknowledged that the Board faced external and internal challenges, such as macroeconomic pressures, inflation, foreign exchange constraints, evolving regulations, competition, the need to scale operations while maintaining controls, talent retention, and the pressure to balance growth with caution. According to him, the Board addressed these issues through scenario planning, timely policy changes, stronger risk buffers, and close coordination with management and regulators.

Analysts noted that early action in portfolio rebalancing, capital planning, and governance helped the Bank remain agile. Asset quality remained solid, with 95.7pc of loans classified as "pass" and only 1.8pc as special mention.

Mulugeta credited “closely monitoring borrower situations and proactively implementing corrective measures to prevent loan delinquency.”

In an environment where rising rates, exchange rate volatility, and slowing economic activity are expected to test borrowers, this was a notable outcome for a young bank.

Ahadu Bank’s performance reflected a late entrant that had found a profitable niche, albeit with structural weaknesses common to young lenders. Confidence-sensitive funding, limited long-term resources, and a capital base trailing regulatory requirements. Its year is best viewed as a distinct story in an industry where larger banks set the overall tone for confidence and liquidity. High performers like Zemen Bank benefited from large non-interest income and foreign exchange income, strong operating leverage, and positions that capitalised on shifts in the forex regime.

At the other end, Nib Bank’s heavy losses revealed the risks of poor alignment with forex revaluation. Ahadu Bank’s profitability was strong but not windfall-driven, with gains built on core spreads and fees rather than exceptional forex movements, but also limiting upside when market shifts occurred.

Non-interest income accounted for 60.6pc of revenue, while interest income accounted for 39.4pc. Personnel expenses grew by 27.8pc to 626.37 million Br, while other operating expenses grew by 21.7pc to 426 million Br. This appears to have led Ahadu Bank to slow branch expansion, merge four underperforming branches, and open two new locations, ending the year with 102 branches.

“This is a disciplined approach to branch expansion, prioritising efficiency and strategic positioning over scale,” Anteneh said.

At the Sarbet branch, one of its earliest, its Branch Manager, Zenash Belay, a 20-year industry veteran, saw that the focus was moving to digitalisation, especially QR Codes and mobile banking. The Branch’s foreign exchange gains came mainly from import and export clients. Located near the African Union, the Branch serves a large corporate customer base. It records about 20 walk-in customers daily, with most activity at the service desk.

The President cited this as a progress in digital banking, including upgrades to mobile platforms and the launch of digital lending for individuals and small businesses. The Bank’s in-house "School Pay" system now serves nearly 20 schools and is set to expand. Digital transactions accounted for over 42pc of volume.

More than 390,000 new customer accounts were opened during the year, taking the total above one million. The Bank raised 3.22 billion Br in new deposits and generated 88.2 million dollars in foreign exchange. The loan portfolio reached 4.43 billion Br, supported by prudent lending and risk management.

However, liquidity management remained a concern. Cash and bank balances increased by 42.4pc to 2.92 billion Br, though the ratio of cash and balances to total assets slipped to 29.2pc from 31.9pc. Abdulmenan observed that the Bank needed to use excess liquidity more efficiently to drive income. The high reliance on customer deposits, over 92pc of liabilities, made maintaining depositor confidence essential.

Anteneh disclosed that the focus is on sustainable profitability and on ensuring long-term competitiveness through improved asset quality, diversified income streams, digital transformation, a compliance culture, and human capital development.

“Our objective is not just growth, but enduring institutional strength, positioning Ahadu Bank as a resilient, trusted, and forward-looking financial institution in the banking sector,” he said.

PUBLISHED ON Jan 24,2026 [ VOL 26 , NO 1343]