Amhara Bank Survives Rough Waves Yet to Outrun Risks

Apr 26 , 2026. By NAHOM AYELE ( FORTUNE STAFF WRITER )

Amhara Bank had strong capital and acceptable liquidity, but was structurally tighter than average because its loan-to-deposit ratio was high. On earnings, it remained below the peer average, and on efficiency, it was improving but still burdened by staff, branches and administrative costs.

Amhara Bank’s accounts for the last year tell a recovery story edged with warning. The Bank closed the 2024/25 financial year larger, better capitalised and back in profit after a concerning opening quarter, yet its figures showed a financial institution still trying to turn scale into durable earnings.

The Bank expanded its balance sheet, rebuilt confidence, and reversed heavy losses, but remained burdened by a costly branch-and-payroll structure, weak productivity, and credit-risk signals that warrant a closer look. For shareholders, the year brought neither collapse nor vindication. It marked a transition from emergency repair to a phase in which governance, earnings quality, and credit discipline will determine whether survival becomes performance.

The drama began early. The previous year, the Bank recorded a loss of 924 million Br. By the end of the following fiscal year, that loss had been fully reversed. Gross profit reached 655 million Br, and profit after tax was 592 million Br. Had the Bank started from a zero-base scenario, profit by June 2025 could have reached nearly 1.6 billion Br.

Yet the annual outcome was a stabilisation, not a decisive breakout.

According to Gashaw Debebe, the board chairperson, who had served as a senior official at the Ministry of Trade, the Bank was able to "sustain its growth" and called the outcome a "substantial progress."

Amhara Bank survived a year that began with distress and ended with profit, but the numbers show a lender closer to a turnaround case than a top-tier mid-sized performer.

Yohannes Ayalew (PhD), the Bank’s second president, offered a sharper version. He came to the helm in September 2024 after serving as vice governor of the National Bank of Ethiopia (NBE), and called the year a rescue mission.

"I saved the Bank from death and made it a bank again," he said.

He attributed the recovery to aggressive loan collection, improved asset recovery and renewed customer confidence. Fee and commission income also helped.

Revenue grew by 1.3 billion Br to 5.6 billion Br; interest income contributed 4.5 billion Br (80pc of total revenue), and fees nearly doubled to one billion Birr, while other income contributed 91 million Br.

Gross income increased by 28.8pc and net interest income by 25.4pc, representing 79.9pc of gross income, down from 86.2pc. Fees lifted its share to 18.5pc from 12.1pc, while net interest income was 53.9pc of gross income and 72.9pc of operating income, down from 80.1pc a year earlier.

Aminu Nuru, a Doha-based financial analyst, saw this as a positive trend in the broader banking industry, which has expanded more rapidly.

Industry assets expanded by 44.5pc to 4.74 trillion Br, deposits climbed by 40.7pc to 3.51 trillion Br, liquid assets almost doubled to 1.07 trillion Br, and net income after tax by 61.3pc to 93.4 billion Br. Total liquid assets grew by 90.9pc.

Among 11 banks that are peers of Amhara Bank, deposits grew by 33.49pc, while loan growth was 17.4pc, keeping the average loan-to-deposit ratio at 73.48pc. Return on assets (RoA) averaged 2.1pc, asset-to-equity 7.97 times, capital-to-asset 12.54pc, and employee profit 310,655 Br.

Amhara Bank sat awkwardly inside this performance. Its asset base reached 43.4 billion Br, up by 8.2 billion Br (23pc). Total assets grew by 23.2pc to 43.38 billion Br, below the 31.24pc average. Deposits jumped to 31.5 billion Br, a 25.7pc increase, lagging the average deposit growth of 33.49pc.

Loans grew by 28.6pc to 25.62 billion Br, well above the peer average of 17.4pc, and accounted for about 60pc of assets. Total liabilities expanded by 6.7 billion Br to 34.8 billion Br.

These made Amhara Bank more credit-heavy while peer banks built liquidity. Its loan-to-asset ratio was 59pc, close to the average of 59.62pc. Its loan-to-deposit ratio reached 81.36pc, materially above the average of 73.48pc. Only Hibret Bank, at 85.6pc, was more stretched, while Ahadu Bank posted 55.10pc. According to financial analysts, the ratio was not alarming on its own, but it left less room for deposit shocks.

Capital was strongest, with total equity expanded by 21.3pc to 8.62 billion Br, while paid-up capital reached 7.42 billion Br. The capital-to-asset ratio was 19.86pc, far above the 12.54pc average. Its asset-to-equity multiple was only 5.03 times, compared with 7.97 times. That made Amhara Bank safer but limited returns if assets were idle. Only Addis and Sidama banks were less leveraged, both at 4.21 times. Coop Bank was the most leveraged last year at 11.30 times.

However, returns were weaker, with gross profit growing by 85pc, above the peer group’s 55.38pc growth. But net profit increased by only 12.9pc, partly due to the previous year’s large tax credit.

Gadaa Bank’s profit after tax surged by 280pc to 342.76 million Br, leaving Amhara Bank’s profit nearly 73pc higher. Amhara Bank was larger than Addis Bank’s 23.6 billion Br asset base, but less profitable. Addis Bank posted 2.2 billion Br in after-tax profit, though foreign-exchange gains heavily supported its profit.

Amhara Bank was smaller than Anbesa Bank, whose assets reached 54 billion Br, deposits 44 billion Br, and pre-tax profit 1.8 billion Br.

Return on assets fell to 1.36pc, 1.37pc on the peer comparison, below the 2.1pc average and far behind Addis Bank’s 9.32pc and Berhan Bank’s 3.55pc. Return on equity slipped to 6.87pc (6.9pc) from 7.4pc, because equity grew faster than after-tax profit. Hence, earnings per share declined from 8.3pc to eight percent.

Net profit margin fell to 10.5pc from 12pc. Asset utilisation improved slightly, with gross income rising to 13pc of total assets from 12.4pc, while the equity multiplier moved from 4.96 times to 5.03 times.

Costs explain the drag as total expenses reached about five billion Birr, up by 24pc. Interest expense was 29.4pc of total expense, below the 11-bank pooled ratio of 40.22pc and down from 33.6pc a year earlier.

Personnel costs were 1.7 billion Br, 34.1pc of total expenses, and administrative expenses were 1.34 billion Br, comprising 26.9pc. Together they consumed 61pc of expenses. The peer ratio was heavier at 77.34pc, but Amhara Bank’s burden remained high.

Cost-to-income improved from 85.7pc to 79.8pc, but that was still uncomfortable. Other operating expenses jumped by 72.1pc, partly due to a net foreign-exchange loss of 367.25 million Br.

Aminu urged management to review staff productivity, restructure cost-heavy branches and reduce non-essential administrative costs. Yohannes, the former president, disagreed.

“Profit came from diversifying income and controlling costs, while wages had not been adjusted for almost three years,” he said. “A new wage scale had begun to be implemented in the current fiscal year.”

Credit quality was harder, with loans growing by 28.6pc to 25.62 billion Br, driven by growth across most sectors. The portfolio was mostly commercial, while exports and manufacturing together accounted for 77.3pc, equivalent to 20 billion Br.

According to Yohannes, non-performing loans dropped from nearly 15pc, about three times the regulatory limit, to around four percent after aggressive recovery and stopping loan rescheduling. The Bank recovered nearly 10.2 billion Br, representing more than 40pc of its 20 billion Br loan portfolio. Cash and cash equivalents increased to 7.6 billion Br.

Yet IFRS staging points the other way. Stage 1 loans grew to 24.07 billion Br from 19.57 billion Br, but Stage 2 loans surged to 751.9 million Br from 306.2 million Br, and Stage 3 loans jumped to 1.12 billion Br from 172.9 million Br. Gross Stage 3 loans reached 4.31pc of gross loans, close to the five percent regulatory ceiling, while Stage 2 and Stage 3 together reached 7.21pc, up from 2.39pc. Loan impairment provision increased by 148.8pc to 189.95 million Br.

For Abdulmenan Mohammed (PhD), the London-based financial analyst, the increase "should concern the management of the Bank."

Loan allowance was 319.43 million Br, equal to 1.23pc of gross loans and 28.5pc of Stage 3 loans. The impairment charge was 0.73pc of gross loans, up from 0.38pc and above the 0.56pc peer ratio.

Abdulmenan warned of exposures to a handful of large borrowers behind the veneer of loan growth and profit.

“The Board and Management were blamed for credit concentration, large exposures and repeated rescheduling of loans for large borrowers, practices that could have serious negative consequences,” he told Fortune.

He urged an overhaul of lending and credit management practices, closer examination by the Central Bank and accountability for those responsible.

Governance has been another unresolved issue at Amhara Bank, which had the largest shareholder base (165,000) when it was incorporated in 2022. Yohannes left months after leading the recovery, but he blamed “elements within the Bank who wanted to capture the institution” and did not want him to stay, for his resignation in January this year.

He joined Amhara Bank after the founding President, Henok Kebede, resigned in December 2024, and an interim leadership led by Chanyalew Demissie took over.

After Yohannes’ departure, board members alleged that the Bank submitted misleading reports to the Central Bank, omitting internal audit findings. They cited accounting inconsistencies between system records and actual balances, alleged inflated loan disbursements beyond approved limits, breaches of lending caps, weak loan classification, high-risk exposure to poorly secured loans, flawed credit-loss models, and cash shortages during branch inspections.

Yohannes rejected all the charges.

"I rectified what they mismanaged," he said.

After his departure, Gashaw, who replaced Melaku Fenta, the founding board chairman, has installed new leadership. Samuel Tadesse was appointed chief retail banking officer and acting president. Eshete Yimata became chief corporate banking officer; Mengistu Hailu, chief corporate support services officer; and, Behailu Gullalat, chief banking operations officer.

According to Yohannes, now leading Tseday Bank, Amhara Bank “rests on a stronger foundation and could become strong if stability is maintained.”

However, not everyone appears to be reassured. According to a branch manager in Addis Abeba, speaking anonymously, networks often outweigh professionalism in appointments and promotions, with posts treated as "gifts from the Board."

The Bank ended June 2025 with 315 branches and 4,762 employees. Gross profit per employee was about 137,500 Br, far below the peer average of 310,655 Br. Deposit per branch was about 100 million Br, below the average of 150.05 million Br.

“Leadership instability has kept the Bank below its potential,” he told Fortune, sceptical of a full turnaround this fiscal year.

Shareholders share the scepticism. A founding shareholder, Gebrehiwot Worku, claimed he has never received dividends and would sell his shares if a buyer were to come. Another shareholder, Sewagegn Chane, quipped that investing in the Bank might have been a mistake.

"As an investor, I should expect returns,” he told Fortune, “but now I only hope the bank survives."

However, analysts say Amhara Bank should not be viewed as distressed, as its 2024/25 result was a successful stabilisation, although with unresolved quality risks. Its performance for the eight months of the current financial year showed progress, with gross profit reaching 1.82 billion Br, assets expanding to 52.76 billion Br, deposits reaching 37.9 billion Br, NPLs remaining at 4.9pc, and more than 9.9 billion Br in loans recovered. The test is whether survival becomes durable profitability.

PUBLISHED ON Apr 26,2026 [ VOL 27 , NO 1356]