Lion Bank’s Quiet Reimagining Gains Roar in Profits Despite Headwinds

Dec 6 , 2025. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Lion International Bank (LIB), a mid-tier lender once overshadowed by its larger competitors, quietly posted its strongest performance to date during the 2024/25 financial year. The Bank saw assets rise by 25pc to 54 billion Br and gross profits nearly double to 1.8 billion Br. Despite lingering effects from wartime trauma, particularly in Tigray Regional State, where key operations and financed factories were devastated, LIB’s leadership announced a phase of “reimagining” to shift from recovery to scalable growth.

Lion International Bank (LIB), a mid-tier lender long overshadowed by flashier competitors, quietly posted its strongest performance to date during the 2024/25 fiscal year, helming a banking industry under regulatory pressure, macroeconomic turbulence, and lingering wartime trauma.

With assets rising 25pc to 54 billion Br and profits nearly doubling to 1.8 billion Br before tax, LIB has entered what management called a phase of "reimagining", a strategic reset meant to transition the Bank from post-war recovery to scalable growth. However, its resurgence comes at a delicate time.

While the economy wrestled with double-digit inflation, forex shortages, and geopolitical risks, LIB’s Board and executive team have bet on a broader retail base, digital migration, and disciplined lending as hedges against volatility. Its executives' tone remained modest despite the numbers.

“Some peer banks performed better,” said Daniel Tekeste, LIB’s fifth president since its 2006 incorporation, who characterised the results “encouraging” but “medium level.”

His caution was not without merit. The war in the country’s north saw LIB’s operations in the Tigray Regional State, where it had both its largest depositor base and biggest loan exposure, devastated. The factories it financed were destroyed, while borrowers fled to settlement camps.

"We gave loans to manufacturing factories, but the factories were destroyed in the war," Daniel told Fortune.

And yet, LIB pushed through. Loans and advances climbed 18pc to 36.2 billion Br, easily outperforming peers like Nib International Bank (NIB), which posted a nearly 10pc contraction. Addis Bank fared modestly better with 14pc loan growth. In a financial system where the Central Bank reported an average private sector loan growth of 11.7pc, LIB stood out.

Deposits grew by 23pc to 44 billion Br, helping LIB maintain a comfortable liquidity profile. Its loan-to-deposit ratio of 82pc showed strong resource deployment without breaching prudential limits, and customer deposits covered over 93pc of liabilities. Nearly a quarter of assets are held in liquid instruments such as cash and government securities, thereby shielding the Bank from sudden funding shocks.

At the heart of LIB’s renewed momentum was a rapidly growing customer base. Retail account holders rose to 2.4 million, a 24pc increase, pushing average deposits per customer to around 18,000 Br. The move mirrored a deliberate shift away from dependence on large depositors and an attempt to insulate against liquidity risks.

“A wide customer base lowers that risk,” said Daniel.

The Bank’s digital overhaul played a crucial role in this diversification, adding nearly 800,000 mobile banking users and over 300,000 cardholders. Yet, LIB’s growth spurt has exposed vulnerabilities, particularly in cost control.

Despite a 73pc increase in total revenues, expenses climbed faster still, up by 78pc, driven by a 37pc surge in salaries and benefits and rising branch rental and administrative costs. Interest expenses grew by 24.7pc to 2.67 billion Br, while operating expenses jumped by 32.6pc to 1.18 billion Br. Nonetheless, the 51pc increase in total expenditures raised eyebrows among analysts.

“Management should pay close attention to expenditure control,” warned Abdulmenan Mohammed (PhD), a London-based financial analyst.

He credited LIB for navigating challenging conditions but flagged its widening cost-income gap.

Daniel admitted that LIB missed internal cost targets, noting that his Bank requires its expense growth to trail income by at least three percentage points, something it has yet to achieve. The rising cost base is not without justification, though. The Bank added 35 branches, bringing the total to 341, and expanded its workforce to 6,888 employees. But the return on this investment, while promising, was not yet optimal. Profit per employee was at 183,000 Br, while average deposits per branch reached 129 million Br, metrics that lag those of more established competitors such as Awash and Dashen banks.

Nevertheless, key profitability ratios have moved in the right direction. Return on equity (RoE) reached around 19pc and 20pc, and return on assets (RoA) reached 2.3pc, outperforming mid-tier peers. NIB and Addis banks reported returns on equity of 15pc and nine percent, respectively. Earnings per share (EPS) grew by 51pc to 423.82 Br. Net interest income was 2.8 billion Br, roughly two-thirds of total income, with LIB operating a net interest margin between five percent and 5.5pc.

Non-interest income rose sharply, with fees and commissions more than doubling to 665.42 million Br, and other operating income growing by 182pc to 1.19 billion Br. Foreign exchange gains also rose fourfold, though LIB still trailed competitors in this segment.

“The foreign exchange mobilisation for the year was below our target,” Daniel admitted, citing limits on credit growth and weak correspondent banking relationships as contributing factors.

LIB’s capital adequacy, while improved, remained thin. The Bank’s equity multiplier of 8.3 unveiled its high leverage, capital accounts for just 12pc of assets, a level that boosted profitability but left little room for error should asset quality deteriorate. Paid-up capital grew by 21pc to 3.69 billion Br during the reporting period. Subsequent measures, including share sales and the acquisition of equity from the aborted Ge’eze Bank, pushed that figure to 6.8 billion Br, comfortably above the National Bank’s five-billion-Birr threshold due by mid-2026.

“This was a joint achievement of the board and management,” said Alem Asfaw, board chairman, who is also a veteran in the leather and tannery industry.

However, concerns over credit quality lingered. LIB’s non-performing loan (NPL) ratio was not publicly disclosed, a common opacity across the domestic banking industry. Provisions for loan and asset impairments rose by 18.9pc to 436.52 million Br, equivalent to 6.9pc of interest income and pushing the loan provision ratio to 7.03pc, two percentage points above the Central Bank’s ceiling. Daniel attributed the increase to the war’s "extraordinary impact" and said the Central Bank “accepts that Lion Bank faced unwieldy pressure.”

Management claimed the NPL ratio fell to six percent in the first quarter of the current financial year.

LIB’s lending remained concentrated in trade-related activities, such as export, import, and domestic commerce, accounting for 75pc of loans, with 36pc going to exporters. Daniel defended this focus, calling it a “double benefit” strategy that earns revenue while helping the foreign exchange crunch. But with the trade environment fraught with price volatility and forex scarcity, the risk of defaults loomed larger.

"The Bank had conducted stress tests and would proceed cautiously," Daniel told Fortune.

One area of visible improvement was liquidity. Cash and bank balances climbed by 31.5pc to 3.35 billion Br. LIB also increased its investment in treasury bills and bonds by over 50pc, signalling an effort to deploy idle cash and generate returns. The loan-to-deposit ratio dropped by 3.4 percentage points from 85.6pc, a subtle but meaningful shift that added breathing room.

The Bank’s retail strategy depended not only on digital channels but also on physical presence, though Daniel noted that the cost-benefit equation was shifting.

“Digital banking delivers better returns,” he said.

Yet, the 35 new branches revealed the Bank sees value in reach, at least for now.

“We measure each branch’s performance and may close those that don't perform well,” said Daniel.

Lion Bank launched operations a year after its incorporation with a paid-up capital of 108.2 million Br, raised from over 3,700 founding shareholders.

Shareholders appear to share management’s cautious optimism. Kahsay Ekubay, a founding shareholder, called the performance “encouraging” and urged the Bank to stop leaning on the past.

“The Bank should now stop referring to past challenges and work to overcome the problem and return to strong profitability,” he told Fortune.

Branch managers, too, see signs of progress. According to Sisay Dejene, who manages a key branch inside Golagul Building on Haile Gebresellasie Road, the focus on corporate clients has helped boost deposits.

“We’re working to maintain this good performance in the current fiscal year,” he told Fortune.

LIB’s transformation remained a work in progress. The Bank has yet to close the gap with the industry's elite but has positioned itself as a credible contender among the ambitious second-tier financial institutions. Analysts urged that the road ahead requires tighter expense controls, enhanced risk disclosures, and diversification beyond trade finance. Yet, LIB’s management appeared aware of the stakes and ready to adapt.

“We are reimagining,” said Daniel.

In an industry rife with inertia and fragility, that alone may be half the battle won.

PUBLISHED ON Dec 06,2025 [ VOL 26 , NO 1336]