Nib Bank Reels from Currency Shock as Losses Mount, Shareholders' Pressure Grows

Dec 20 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Nib International Bank ended its latest fiscal year with a net loss of 2.98 billion Br, reversing a 957 million Br profit in the previous year. At the centre of the downturn was a 4.41 billion Br foreign-exchange revaluation loss, the single largest line item to overwhelm its income statement, leaving core banking operations average by industry standards.

In an ordinary period, a year that closes with a multi-billion-Birr loss is usually read as a judgment on management. However, last year was more often a judgment on macroeconomics. Set against industry averages from the 2023/24 financial year, when assets, deposits, and profits had grown strongly in the prior year across private banks, Nib Bank's trends broadly mirrored them.

Few balance sheets demonstrate this more clearly than that of Nib International Bank (NIB), whose annual results read less like a story of operational failure and more like a case study in how abrupt policy shifts can overwhelm capital buffers, scramble peer comparisons, and reorder league tables across the private banking industry. If not for the forex shock, Nib’s earnings and returns would have rivalled those of Lion and Abay banks.

Nib ended the year with a net loss of 2.9 billion Br, a sharp reversal from the 957 million Br profit recorded a year earlier. At first glance, the headline figure appeared damning. A closer look, however, uncovered a more nuanced picture. One line item alone, a foreign-exchange revaluation and transaction loss of 4.41 billion Br, eclipsed every other component of the income statement. Strip that out, and the Bank’s core operations remained liquid and, by the domestic banking industry standards, average.

This distinction matters because 2024/25 was all but a regular year. The National Bank of Ethiopia’s (NBE) unification of official and parallel exchange rates rewired incentives, repriced balance sheets, and detonated legacy positions that had accumulated under several years of currency distortion. Some banks, such as Awash, emerged as beneficiaries. Others, including Nib, absorbed the shock. Its losses appeared anomalous to the industry but also explainable. Unlike Zemen and Addis International Bank, another beneficiary of foreign-exchange gains, Nib entered the year with positions that proved costly once rates converged.

The resulting accounting shock undermined years of accumulated earnings in a single year.

Nib Bank's Board Chairman, Shisema Shewaneka, acknowledged that macroeconomic reforms, combined with intensifying competition, had complicated the operating environment. Nevertheless, he pointed to strong performance across several operational indicators, noting that customer trust and strategic leadership continued to underpin the Bank. Shareholder-linked non-performing loans (NPL) remained a challenge for compliance targets, but the Board signalled plans to intensify digital investments to cut costs, reduce reliance on branches, and strengthen competitiveness.

Customer deposits grew during the year, but the increase was insufficient to offset declining profitability or ease pressure on capital.

Capital adequacy weakened sharply, with the capital-to-asset ratio falling to 11.3pc, still above the regulatory threshold but leaving less room for shocks. Shareholders’ equity fell by 28pc to 7.5 billion Br, leaving a thin capital cushion relative to peer banks like Wegagen and Abay.

However, asset quality indicators were more reassuring, with impairment charges falling to 0.13pc of gross loans.

Asset turnover, measured as operating income over total assets, held steady at around nine percent. Financial leverage increased as equity was written down, with assets standing at nearly nine times capital. The decisive factor was the collapse in net profit margin, from a positive 50pc to negative 49pc, driven almost entirely by exchange-rate exposure.

Zemen Bank, operating a minimalist branch model with heavy digital orientation, emerged as a clear winner. It posted a profit-to-asset margin exceeding 48pc, buoyed by foreign-exchange gains and tight cost control. Asset and deposit growth of roughly 50pc lifted its balance sheet to nearly 89 billion Br, while a loan-to-deposit ratio of about 64pc left it highly liquid. Abay Bank also delivered strong results, more than doubling pre-tax profit and expanding assets to more than 90 billion Br. Lion International Bank doubled gross profit to around 1.8 billion Br, while Wegagen Bank combined solid profitability with the strongest capital buffer among peers.

Nib Bank's core earnings came under strain as net interest income fell 17pc, while total expenses surged from 9.6 billion Br to 14.1 billion Br. Much of the increase reflected long-standing foreign-exchange liabilities and commitments that had remained unsettled for years amid chronic shortages of hard currency.

Operating income slipped marginally, from 6.2 billion Br to 6.1 billion Br, driven by a decline in interest income, which fell from 9.6 billion Br to 9.1 billion Br. The deterioration was evident in profitability ratios. Return on assets fell to negative 4.5pc against a balance sheet of 66.16 billion Br, while return on equity dropped sharply by 39.8pc. Earnings per share (EPS) tumbled from 70 Br to negative 192 Br. Wage and administrative costs absorbed about 46pc of income, a heavy but typical ratio for peer banks with dense branch networks.

Yet, even within the loss-making year, there were areas of relative strength. Net fees and commission income increased, displaying a gradual shift toward non-interest revenue. Cash and cash equivalents grew by nearly 30pc, from 6.2 billion Br, as management moved to shore up liquidity. The loan-to-deposit ratio fell from an aggressive over 90pc to 85.84pc, evidence of stronger deposit mobilisation and a deliberate contraction in lending. The improvement showed renewed depositor confidence.

Nonetheless, Aminu Nuru, a financial analyst based in Doha, Qatar, noted that while the foreign-exchange valuation loss could be classified as a one-off shock, persistent weaknesses remained, particularly high operating costs and historically weak loan quality. He pressed on the structural vulnerabilities that require urgent attention, chief among them a foreign-exchange risk management. With the Birr continuing to depreciate, closer monitoring of open positions was seen as essential to prevent further valuation losses.

For Aminu, this is not only a technical adjustment but a decisive step toward safeguarding the Bank’s future in an unforgiving market. Interest income fell by five percent year-on-year (YoY) while interest expense increased by 8.5 pc, leading to a 17 pc drop in net interest income.

Management's response, under Henok Kebede, shifted toward non-interest income as a strategic priority. The Bank expanded digital loan offerings and international remittance services, and rolled out an enterprise resource planning system to improve efficiency and cost control.

Service accessibility improved through the deployment of 500 smart point-of-sale machines, with plans to procure an additional 2,000 units. Deposits jumped from 45.1 billion Br in June 2024 to 54.4 billion Br by September 2025. The customer base expanded by 700,000 to reach 4.4 million. Cash and bank balances rose sharply, to nearly 30pc. Loans and advances contracted nine percent as capital was eroded and risk appetite tightened.

Loans still accounted for roughly two-thirds of assets. Borrowings fell by more than 70pc as Central Bank facilities were repaid, reducing funding risk.

Non-performing loans were reduced sharply, from double-digit in March 2024 to six percent by September 2025, signalling considerable improvement in credit management. Changes in deposit structure reduced reliance on fixed-time deposits by 2.9 billion Br, shifting funding toward more sustainable and lower-priced sources.

At the branch level, operational adjustments mirrored the broader strategy.

According to Besrate Gabriel, branch manager at Zerihun Ajebew, the Bank shifted toward mass-based deposits, which are less risky and cheaper to maintain. While the branch continues to serve mainly corporate clients, challenges remain in rolling out new products such as Nibtera. Staffing has been streamlined, with 25 to 30 employees managing between 50 and 200 clients. Performance-based incentives and loan restructuring have been introduced, along with a renewed emphasis on customer engagement, both in person and remotely.

“Come January, we'll absorb the loss and work on profitability," Henok told Fortune. "Shareholders may receive dividends this year. Returns on equity and assets were already trending upward."

Henok has been in the banking industry for over two decades, having served at the state-owned Commercial Bank of Ethiopia (CBE), Dashen Bank, and as the founding president of Amhara Bank. A graduate of management and international business studies from Addis Abeba and Greenwich universities, he took the helm at Nib at a moment when the Central Bank’s tight monetary policy influences borrowing costs and pushes banks to compete more aggressively for deposits.

This year, his team of executives focusing on managing asset accumulation, with risk considerations shaping their approach. Following new Central Bank regulations on risk-based capital, the Bank concentrated lending in the export sector, reducing exposure, and postponed large-scale activity in domestic trade, services, and construction until outstanding commitments are resolved.

Henok identified loan recovery and further reduction of non-performing loans as immediate priorities, noting that credit risk remains another pressure point. Aminu urged stricter underwriting standards and more aggressive recovery of non-performing loans, stating that asset quality remains central to institutional credibility. For analysts like Aminu, equity erosion also demanded immediate action, with recommendations ranging from fresh capital injections to higher earnings retention to restore capital adequacy and strengthen resilience.

Previously, 72pc of the Bank’s income came from interest earnings, driven mainly by digital operations. The cost-to-income ratio was 63pc, a level Henok considered "manageable." Investments in Central Bank bills remained high at 4.85 billion Br, providing stable returns despite regulatory constraints.

Henok hoped to reclaim efficiency gains through resource optimisation, digitalisation, and the introduction of new products such as Amber Pay and Nibtera. Branch consolidation reduced the network to 25 locations, helping to rein in operating costs.

The 2025/26 fiscal year has already marked what management described as a turning point. A three-year strategic plan and a five-year roadmap target to reposition the Bank on a firmer footing. Early signs include improvements in liquidity ratios and reserve requirements, enabling the resumption of lending and foreign-exchange services, both of which have helped restore client confidence.

Not all stakeholders were reassured, as long-time shareholders, such as Kifleyaekob Demessie, raised concerns about accounting practices, challenging deductions of 229 million Br for employee benefits and 515 million Br for foreign-exchange losses in the last year's annual report. Kifleyeakob questioned their credibility and compliance with regulations. He also pointed to a decade-long failure to reconcile MasterCard and Visa service fees totalling 177 million Br, attributing it to "systemic negligence or preferential treatment."

Kifleyaekob, one of the close to 6,000 shareholders, warned that misrepresenting financial health could undermine public trust, liquidity, and dividend distribution, calling for a thorough investigation into internal controls and regulatory oversight.

“It isn't only about dividends," he told Fortune. "I've invested my best years’ worth in this Bank.”

The source of his discontent, and that of several shareholders who met in October at the Millennium Hall on Africa Avenue (Bole Road), could be that dividend payments have been suspended for three consecutive years while operating expenses and employee benefits have remained elevated, climbing slightly. Impairment provisions increased sharply due to earlier deterioration in loan quality.

Operationally, however, the income engine did not stall. Net interest income, fees, and other non-interest revenue generated 6.11 billion Br in operating income. Net interest income accounted for over 70pc of total income, down from the previous year, as fees and commissions grew faster.

For a bank incorporated in 1999 with 27.6 million Br in paid-up capital, NIB's last year's performance was less a story of a bank losing its way than of a financial system trying to discover its price. Nib’s liquidity and asset quality were satisfactory, but capital adequacy and earnings weakened.

According to analysts, its underlying operations remain resilient, with deposits growing, net interest income remaining robust, and impairments low. However, they attributed the currency shocks to poor hedging and governance lapses. For Nib, the challenge remains ensuring that a year lost to currency does not become a decade lost to capital.

PUBLISHED ON Dec 20,2025 [ VOL 26 , NO 1338]