Hijira Bank Flushes With Cash in a Market Starved of Credit

Jan 31 , 2026. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Hijra Bank closed its 2024/25 financial year on a high, with profit before tax soaring nearly eightfold to 721 million Br and assets expanding by 79pc to 14.6 billion Br. Earnings per share (EPS) jumped by 196pc to 73.84 Br, signalling a period of rapid growth and resilience in the face of a challenging banking industry. Management credited these achievements to a disciplined, Sharia-compliant business model and a deliberate outreach strategy.

Hijra Bank closed the last financial year with numbers that would flatter any young lender, with profits multiplied, deposits surged, and capital buffers thickened.

However, beneath the headline growth lay a more sobering reality. The Bank’s performance was as much a product of regulatory constraint as managerial execution, exposing the limits of expansion in the tightly controlled financial system.

Abduselam Kemal, chairperson of Hijra Bank’s board, saw last year as a stress test for the domestic banking industry, one that forced financial institutions to weigh discipline against the temptation of chasing volume.

“The binding constraint for banks was not demand but regulation,” he said in a statement published in the Bank's annual report for the 2024/25 financial year.

He was referring to the National Bank of Ethiopia’s (NBE) cap on credit growth. That policy compelled Hijira Bank's management to engineer balance sheets with precision. In Abduselam’s words, the Bank “chose discipline and was rewarded for it.”

The numbers tell a story of progress. Earnings per share (EPS) jumped by 196pc to 73.84 Br. Profitability gains were driven by income from financing, fees, commissions, and, especially, "other operating income," notably a 301pc increase in foreign exchange gains, more than 530 million Br from operations involving 40 million dollars. Assets swelled by 79pc to 14.61 billion Br, while operating income hit 1.8 billion Br, up by 152pc.

Profit before tax reached 721 million Br, nearly an eightfold increase.

However, the success, while real, is nuanced. Hijra Bank, incorporated in 2021 as Ethiopia’s second full-fledged Sharia-compliant financial institution, remains a smaller player in a crowded industry. Its deposit base, though expanding rapidly to nearly 15 billion Br by December 2025, ranked 21st among 27 private banks, representing 0.69pc of the 2.2 trillion Br total for private banks. While the average private bank held over 81 billion Br in deposits, Hijra Bank’s was about one-fifth that size.

Among newly formed private banks holding over 303 billion Br in deposits, Hijra ranked fifth. Notably, Siinqee Bank dominated this tier, accounting for nearly 48pc of new-bank deposits. Excluding Siinqee for a more accurate peer comparison, Hijra Bank’s deposit size was 96pc of the new-bank average, making it typical among its immediate competitors.

Retail mobilisation has brought a savings-heavy deposit base, revealing that Hijira Bank was less dependent on large corporate or institutional accounts. This mix offers funding stability, particularly if customers are motivated by identity and trust. Its small share of private-bank deposits limits its competitiveness in branch economics, transaction banking, pricing power, and cross-subsidies between funding and fee income. Its demand-deposit share of 23pc, well below the industry average, pointed to weaker transaction banking penetration, an area critical for fee generation and deposit stickiness.

Its deposit mix was heavily skewed in favour of savings, made up 68pc of the total, far above the industry average of 55pc, with demand and time deposits lagging.

For analysts, such as Aminu Nuru, a financial expert based in Doha, Qatar, this deposit structure, anchored in savings, offers some stability, for such funds are less prone to withdrawal than rate-sensitive or wholesale deposits. However, it also signalled limited reach into corporate current accounts and a limitation on pursuing longer-term, more expensive funding aggressively. In an industry where deposits are the oxygen of growth and liquidity punishes weak franchises, this expansion is noteworthy but leaves room for improvement.

For founding President Dawit Keno, the year was both a validation and a challenge.

“I ended the year with a feeling of happiness,” said Dawit, a veteran banker who once served as a vice president at the state-owned Commercial Bank of Ethiopia (CBE). “It was the year in which the Bank saw the results of its efforts.”

Daiwt attributed the results to “an ethical-finance positioning that coexists with rapid commercial scaling.” The Bank’s growth was driven in part by its Sharia-compliant business model, a factor management believes is helping win public trust and drive deposit momentum.

Nonetheless, the figures are only part of the story.

Expenses climbed sharply, growing from 631 million Birr to over one billion Birr, with personnel costs alone up 57pc to 588 million Br. These costs were attributed to the Bank’s expansion, 29 new branches and 377 new employees, bringing the total branch network to 129 and headcount to match. The cost-to-income ratio reached around 58pc, putting pressure on future profitability.

Yet, revenue growth was robust, with total income leaping from 715 million Br to 1.79 billion Br, a 149pc gain. Financing and investment income, the largest contributor, nearly doubled to 797 million Br, while fee and commission income grew steadily to 517 million Br. Net profit after tax reached 488.7 million Br, almost five times the previous year’s 100.5 million Br.

Deposit mobilisation was central to the Bank’s performance. Account holders jumped 69pc to 931,147, with branch expansion helping reach customers nationwide. Of these, 22pc were located in Addis Abeba and 78pc outside the capital, unveiling a deliberate strategy of financial inclusion. However, deposits per branch, at about 89 million Br, remained below industry averages, revealing that the branch network was still maturing.

According to Mohammed Seid, a 13-year banking veteran who manages the branch at Mercato Bilal, the year was “amazing,” attributing the surge in deposits to customer trust and the branch's strong performance.

“The extraordinary performance sets a high benchmark, challenging us to do even better this year," he told Fortune.

Hijra Bank’s digital push also gained momentum. Its HalalPay platform registered 812,000 users, with 34.5pc of transactions now digital.

The Board Chairman commended the expansion of HalalPay, presenting it as a strategic inclusion tool rather than a supplementary product.

Dawit recalled the application’s launch phase, focused on awareness and user growth rather than immediate revenue. He voiced confidence that digital banking would become a key pillar of future operations.

In the first six months of this year, the Bank disbursed more than 600 million Br to nearly 1,500 customers through digital channels. The introduction of E-Murabaha financing, targeting micro and small enterprises through mobile, was dubbed "a first-of-its-kind initiative in Ethiopia."

Hijra Bank’s growth was non-linear, with effective customer acquisition outside its physical branch footprint, compressing marginal costs and broadening reach. Its approach to liquidity has drawn praise and criticism.

Cash and bank balances reached nearly eight billion Birr at the end of June, accounting for more than half of total assets, demonstrating a highly liquid posture. Aminu cautioned that holding large cash balances during inflationary periods can erode value. Dawit, however, argued that high liquidity was necessary to meet withdrawal demands and support short-term financing, citing regulatory credit caps as a barrier to deploying more funds for lending.

Total financial assets reached 13 billion Br, while liabilities were 12.1 billion Br, yielding a positive mismatch of 1.3 billion Br and signalling no acute funding stress.

Loans and financing to customers reached 4.7 billion Br, while customer deposits peaked to 11.5 billion Br, resulting in a loan-to-deposit ratio of 41.17pc, down from 53.92pc a year earlier. The drop reflected the impact of the regulator's cap on credit growth. According to Dawit, to avoid idle cash, the Bank emphasised short-term revolving financing and Musharaka arrangements that share profits with business partners.

Sector exposure within the financing portfolio also shifted. Domestic trade was the largest sector, growing from 1.36 billion Br to 2.32 billion Br, a nearly 71pc increase. Building and construction, the second-largest sector, fell slightly from 1.29 billion Br to 1.1 billion Br as the Bank shifted its strategy toward export financing. International trade financing, including imports and exports, more than doubled, while manufacturing financing posted only modest gains.

Analysts have warned of risks associated with heavy concentration in trade-based financing, citing supply chain disruptions, forex shortages, and the economy's dependence on imports. Dawit countered that local banks are commercial, and trade remains profitable, with no major setbacks arising from this strategy.

According to Abduselam, the main challenge is to build a well-capitalised institution without losing the ethical and Sharia-compliant identity that has anchored trust and deposit mobilisation. The Bank’s capital adequacy ratio was 31pc, far above the regulatory minimum, offering meaningful loss-absorption capacity.

Edao Abdi, president of the Ethiopian Pulses, Oilseeds, & Spices Processors Exporters Association, characterised the year as challenging but praised management’s performance.

“They delivered encouraging results that gave shareholders confidence,” he said.

Edao, one of the Bank’s 11,000 shareholders, believes in the opportunities that come with Ethiopia’s participation in the African Continental Free Trade Area (AfCFTA) and the anticipated accession to the World Trade Organisation (WTO), voicing optimism about export financing and further deposit growth.

Hijra Bank’s paid-up capital reached 1.93 billion Br by the end of June last year, below the regulatory requirement for June 2026. However, following recent exertions, paid-up capital has surpassed four billion Birr, with plans to reach six billion Birr within two years, offering new and existing shareholders additional shares. Although share dilution is a possibility, management argues that continued growth will allow shareholders to increase their stakes over time.

Despite these strengths, some weaknesses remain. The cost-to-income ratio is high, and while the impairment charge on loans and advances was a low 0.16pc of the financing book, loss allowances in “other financial assets” expanded from 2.55 million Br to 17.13 million Br, a sign of tightening credit conditions. According to analysts, whether this reflected conservative underwriting or the delayed appearance of losses in a young portfolio remains to be seen.

Management remained optimistic, but the challenge is to sustain growth, deepen intermediation, and translate excess liquidity into risk-adjusted returns without losing sight of the Bank’s ethical foundation.

“Through continued effort and discipline, we aim to become a strong financial institution in the country,” Dawit told Fortune.

The harder test, however, will come in the 2025/26 financial year, as capital raising and governance will be tested under greater scrutiny.

PUBLISHED ON Jan 31,2026 [ VOL 26 , NO 1344]