Bunna Bank Finds Its Way Back to Growth, With Strains Close Behind

Mar 21 , 2026. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Liquidity increased sharply at Bunna Bank. Cash and bank balances surged by 78.3pc to 13 billion Br, raising the cash-to-total-assets ratio to 19.8pc from 13.4pc. At the same time, the loan-to-deposit ratio fell to about 83pc from 102.8pc a year earlier. This was a notable shift, though the 83pc ratio still stood above the 11-bank weighted average of 73.48pc. The Bank appeared more liquid than before, but still more heavily loaned against deposits than many peers.

Set against Bunna Bank’s five-year history, the last financial year looked less like a routine reporting period and more like a turning point for a lender that had come through a difficult year. It was a recovery year.

The Board Chairperson, Mulugeta Asmare, and the President, Mulugeta Alemayehu, dubbed the year as one shaped by “economic and political challenges.” Against that backdrop, the Bank posted stronger profitability, deeper digital activity, and balance sheet growth, even while it missed several targets it had set for itself. The results also unveiled a Bank still contending with inflation, foreign-exchange volatility, regulatory limits, instability in parts of the country and the question of whether its best result yet can be repeated.

Its five-year trajectory demonstrated why the latest result mattered. Profit before tax grew steadily from 2021 to 2023, slipped in 2024, then jumped in 2025, making the year a rebound and, in the Bank’s own language, a “springboard to the future.” Gross profit surged 182.5pc to 2.63 billion Br. Net profit jumped to 1.9 billion Br from 740 million Br. Earnings per share (EPS) climbed to 398.65 Br from 161.57 Br, reversing the previous year’s decline.

Placed against peers, the result became clearer, staying comfortably above average, but not at the top. Bunna Bank’s pre-tax profit of 2.6 billion Br and after-tax profit of 1.95 billion Br translated into a return on assets of about 2.98pc. That was well above the 11-bank weighted average of 2.10pc, but far below Addis Bank’s 9.32pc and far above Hibret Bank’s 0.02pc.

Its real distinction lay in the pace of earnings recovery. Bunna Bank’s 182.5pc increase in gross profit was above the weighted average of 55.38pc. Yet the report itself revealed that the rebound was amplified by a weak prior-year base and by foreign-exchange gains. That made the result more dramatic, but also more vulnerable to reversal if the underlying drivers prove temporary. The latest earnings were not simply the product of expansion. They were supported in part by foreign-exchange dealing and revaluation gains.

Abdulmenan Mohammed (PhD), a London-based financial analyst, doubted the Bank would be able to repeat the result in the year ahead.

"This level of performance may not be easy to sustain in the coming year," he said.

Mulugeta, the President, pushed back.

“We’re performing well even this year,” he told Fortune, attributing his positive tone to the Bank’s seven-month performance.

The structure of income supports both interpretations. In 2024/25, total income climbed to 11.74 billion Br, an increase of 46.2pc. Interest income accounted for 67.4pc of total income at 7.91 billion Br. Non-interest income jumped to 3.83 billion Br from 1.24 billion Br. Total expenses increased by 28.3pc to 9.11 billion Br. Interest expense climbed to 3.49 billion Br, while non-interest expense grew to 5.62 billion Br. Within non-interest costs, salaries and benefits accounted for 56.3pc (3.16 billion Br), and administrative expenses accounted for 20.7pc (1.16 billion Br).

On cost composition, Bunna Bank looked lighter than the 11-bank average. Interest expense as a share of total expense, at about 38.3pc, was slightly below the weighted average of 40.22pc. Personnel and administrative costs together amounted to about 47.4pc of total expense, far below the average of 77.34pc. Yet its cost-to-income ratio was 77.6pc, high for a financial institution presenting itself as efficient.

Mulugeta attributed the outcome to “disciplined cost management, process automation, technology-driven efficiency, and strong expenditure control.”

However, Abdulmenan flagged the same ratio as a risk, while Mulugeta, a former vice president at the Commercial Bank of Ethiopia (CBE) and a graduate of Addis Abeba University in accounting and business administration, countered.

“We’re investing to build the future,” he told Fortune, disclosing a plan to bring the ratio below 40pc.

The balance sheet expanded, too. Total assets increased by 20.3pc to 65.58 billion Br. Total liabilities increased by 19.6pc to 56.76 billion Br. Deposits grew by 16.7pc to 51.2 billion Br. Loans and advances climbed by 9.8pc to 42.69 billion Br. Bunna Bank’s asset growth of 20.3pc lagged the average of 31.24pc. Deposit growth of 16.7pc was only about half the weighted average of 33.49pc. Loan growth of 9.8pc also trailed the average of 17.40pc.

That made the recovery harder to read as a simple success story. Bunna Bank’s earnings accelerated sharply, but its balance sheet did not. It remained a mid-sized bank, larger than several peers but smaller than the largest private banks. Its result did not rest on a commanding scale, but on a strong earnings rebound within a middling position among its peers.

The Bank exceeded its annual gross profit target by 630 million Br. Loans and advances reached 96.4pc of the target. Total income reached 97.5pc. But deposits reached only 81pc of the plan. Foreign-currency earnings came in at 70pc of target. Assets were 87pc of the target. According to management, the targets were stretched to push performance. Even so, the deposit shortfall cut to the centre of the banking model.

“Deposit is the blood of a bank,” said Solomon Gebreyesus, a founding shareholder and former board member. “Branch expansion remains essential for mobilisation.”

Yet the deposit story also showed a strategic shift rather than mere weakness.

Savings deposits remained the main funding source, accounting for 65pc of the portfolio. Demand deposits made up 18.7pc, time deposits 11.6pc and interest-free banking 4.7pc. In net mobilisation terms, the Bank raised 3.67 billion Br from conventional savings deposits, 3.32 billion Br from conventional demand deposits and 473.57 million Br from IFB deposits. It also recorded a demobilisation of 136 million Br from fixed time deposits. Compared with the previous year, demand, savings and IFB deposits improved, while time deposits were lower by 2.77 billion Br.

According to managment, this was deliberate, with a target structure of 75pc savings, 20pc current and only five percent time deposits.

“The Bank successfully diversified its deposit mix . . . thereby strengthening resilience and reducing structural liquidity vulnerability,” said Mulugeta.

That caution came with a tradeoff. Cash and bank balances surged by 78.3pc to 13 billion Br, pushing the cash-to-total-assets ratio to 19.8pc from 13.4pc. Abdulmenan argued that Bunna Bank should channel part of that liquidity into income-generating assets rather than leave it idle.

The liquidity story became paradoxical. The Bank still carried a relatively high loan-to-deposit ratio. That ratio fell sharply to about 83pc from 102.8pc a year earlier, but it remained well above the 11-bank weighted average of 73.48pc. Its loan-to-asset ratio of about 65.1pc was also above the weighted average of 59.62pc.

The lending book itself revealed why risk remained alive. According to the Board, the continuation of the National Bank of Ethiopia’s credit-cap policy restricted the Bank’s ability to extend loans as planned. Even so, outstanding loans reached 42.69 billion Br, meeting 96.4pc of the target. The portfolio remained concentrated. Around 38.1pc was tied to international trade, import and export activities, 21.9pc to domestic trade and services, 14.4pc to building and construction and 8.7pc to transport, with the remaining 16.9pc spread across other sectors.

This left the Bank tilted toward commerce and trade-linked activities rather than agriculture or industry, exposing it to foreign-exchange shortages and wider macroeconomic shocks.

Asset quality held, but not without stress. The non-performing loan (NPL) ratio grew to 4.09pc from 3.84pc, below the five percent regulatory ceiling but worsening nonetheless. More tellingly, Stage 3 exposures climbed to about 2.8 billion Br from 1.62 billion Br, while loan-loss provisions jumped to 1.32 billion Br from 771 million Br.

“We’ve a forward-looking risk management strategy,” Mulugeta told Fortune.

However, the direction of the numbers revealed that risk was building beneath the stronger earnings narrative.

Foreign currency remained a bright spot, though not an uncomplicated one. Bunna Bank earned 195.2 million dollars during the year, up by 16.5pc from a year earlier. More than half, 52.5pc, came from bank-to-bank transfers and SWIFT transactions, followed by exports at 39.8pc, interbank transactions at 4.4pc, remittances at 3.2pc, and cash purchases at 0.1pc. The gains were a major reason profit improved so sharply.

Mulugeta depicted the foreign-exchange market regime reform introduced in August 2024 as “a double-edged sword.” He attributed the gains to the “management’s proactive measures in anticipating both opportunities and challenges in the foreign exchange market and responding with timely and effective actions.”

Digital finance was one of the clearest areas of movement. Bunna Bank added 200 ATMs and interactive teller machines, bringing the total to 400. It distributed 107,449 new debit cards, bringing the total number of cardholders to 553,197. ATM transactions amounted to 1.9 billion Br through 1.4 million transactions. Mobile banking grew faster, with 8.3 million transactions worth 40.4 billion Br. Mobile merchant application transactions reached 1.13 billion Br.

Digital adoption reached 40pc of the total transaction amount. The newly launched “ABOL” platform was central to that push. Through it, the Bank developed nine products. It began offering digital loan services to small and medium-sized businesses and to employees of client organisations through the “Abol Demozie” product, disbursing 171.6 million Br. By the end of June 2025, 2.64 billion Br had been disbursed to these businesses, and 1.8 billion Br had been collected.

The shift was also visible in the branch and staffing area. Bunna Bank stopped opening new branches and merged 20 branches with nearby locations. Active branches dropped from 474 a year earlier. Of the 454 branches, 67.8pc were outside Addis Abeba. Permanent staff fell to 3,968 from 4,396, even as deposit accounts grew over the five-year trend to almost five million. Bunna Bank generated roughly 493,000 Br in after-tax profit per employee, above the weighted average of 310,655 Br. But the deposit per branch, at about 112.8 million Br, remained below the weighted average of 150.05 million Br.

According to Tsegaye Bitew, a director of Hawassa District overseeing 34 branches, the District alone mobilised around half a billion Birr in deposits and generated two million dollars in forex.

“We performed well across almost all key performance indicators,” he told Fortune.

Yet he also saw untapped areas remaining unbanked.

“We’re working to bring customers through digital platforms,” he said.

Capital improved, though the picture was mixed. Total capital grew by 24.8pc to 8.8 billion Br, while paid-up capital increased by only 4.7pc to 5.05 billion Br, just enough to cross the regulators' minimum capital threshold ahead of the June 2026 deadline.

Over five years, deposits grew from 20.46 billion Br to 51.19 billion Br, loans from 18.29 billion Br to 42.69 billion Br, total assets from 25.96 billion Br to 65.59 billion Br and paid-up capital from 2.51 billion Br to 5.05 billion Br. Deposit accounts climbed from 1.388 million to 4.995 million. Branches grew from 285 in 2021 to 454 in 2025 after peaking at 474 in 2024. Staff numbers increased from 2,491 in 2021 to 3,968 in 2025 after peaking at 4,396 in 2024.

In an industry with 4.7 trillion Br in total assets, Bunna Bank remained a modest player. Of the 3.5 trillion Br mobilised by the industry, it accounted for only 1.46pc. Its latest year was a year of earnings-led recovery, operational consolidation and strategic repositioning. Bunna Bank looked stronger than the weakest performers and better than average on several measures. But it was not yet among the outright leaders.

PUBLISHED ON Mar 21,2026 [ VOL 26 , NO 1351]