ZamZam Bank Turns a Corner But Toughest Test Lies Ahead

Mar 7 , 2026. By NAHOM AYELE ( FORTUNE STAFF WRITER )

ZamZam Bank’s net profit jumped to 945.5 million Br from 110.3 million Br in a single year, placing it ahead of Hijra Bank’s 488.7 million Br net profit despite the latter's larger branch and customer network. Founding President, Melika Bedri, called it “a turning point,” while the Board Chairman, Nassir Dino (PhD), saw “an extraordinary achievement,” positioning the country's first fully fledged Sharia-compliant bank as a frontrunner among its interest-free peers.

ZamZam Bank’s last financial year looked less like another episode of rapid balance-sheet expansion than a referendum on whether the country's first fully fledged Sharia-compliant bank can turn a pioneering proposition into a durable financial franchise.

For a bank built to serve clients long excluded from formal finance because services aligned with their religious values were unavailable, the year marked a consequential break from the vulnerability of its start-up phase. It was a period when scale, profitability, liquidity, and capital began to reinforce one another sufficiently for the leadership to argue that ZamZam Bank had crossed from experimentation into institutional durability.

Nassir Dino (PhD), a founding shareholder and chairman of the Board, called the performance "an extraordinary achievement" and framed it as evidence that interest-free banking can work and generate profit.

The Bank expanded assets, deposits, equity and profit at a pace few peers matched, while keeping non-performing financing within acceptable limits and holding liquidity well above immediate obligations. For a Bank incorporated in 2021, the year was a break from the fragility of its start-up phase and an early claim to profitability. That shift is central to how the Bank itself reads the year.

Melika Bedri, the founding president, characterised the year as "a turning point" in which ZamZam Bank moved from being an emerging financial institution to a structurally profitable one.

Melika, who studied economics at Addis Abeba University and later earned a postgraduate degree in business administration from The Open University in London, previously served as Chief Financial Officer at Commercial Bank of Ethiopia (CBE).

"We've worked day and night to achieve this result," Melika told Fortune, calling the results one of the proudest achievements of her career.

The scale of the gains supports Nassir's and Melika's assessment.

ZamZam is moving faster than most of its peers. Total assets grew by 76.8pc to 16.58 billion Br. Financing to customers increased 38.8pc to 6.42 billion Br. Customer deposits climbed by 69.2pc to 11.63 billion Br. Total liabilities increased by 77.1pc to 13 billion Br, while total equity reached 3.58 billion Br, expanding by 75.8pc. Equity grew almost in step with assets.

The comparison with other fully fledged interest-free banks sharpens the picture. Hijra Bank ended the year with 14.61 billion Br in assets, 11.94 billion Br in deposits and 4.74 billion Br in financing. Rammis Bank, with assets of 4.3 billion Br and deposits of 2.74 billion Br, appeared to remain in an earlier buildout phase. Shabelle Bank, with assets of 6.03 billion Br and deposits of 2.27 billion Br, had grown quickly but remained only marginally profitable, with a cost-to-income ratio above 95pc.

In this field, ZamZam Bank appeared to have led on the scale of assets, financing, earnings power and efficiency, while Hijra Bank retained only a narrow lead in deposits and a broader customer and branch network.

Profitability was the year’s defining development for ZamZam Bank.

Gross profit reached 1.23 billion Br, up from 147.7 million Br. Net profit climbed to 965.4 million Br from 110.3 million Br a year earlier. Hijra posted 721.2 million Br in pre-tax profit and 488.7 million Br in net profit, leaving ZamZam Bank comfortably ahead on the bottom line. Earnings per share (EPS) increased to 41.4pc from 5.9pc, sharply lifting shareholder value. In only its fifth year, the Bank found itself in a position to pay dividends, placing it among the few fully fledged Sharia-compliant banks to reach this milestone so early.

According to analysts, the earnings engine, however, deserves closer scrutiny. The surge in profit was driven largely by commission and service charges, export-related income and net gains from foreign-currency revaluation.

Fee and commission income grew 314pc. Other operating income surged 457pc, driven mainly by foreign-exchange gains. Total income reached 2.19 billion Br, while total expenses were about 959.5 million Br, unveiling a cost-to-income ratio of roughly 43.8pc. This marked a material improvement in cost discipline and showed a much larger share of revenue being converted into profit. Yet it also revealed that the most dramatic gains did not come mainly from a broad financing book, but from fees and foreign-exchange-linked activities.

That is where some caution entered the story. Aminu Nuru, a Qatar-based financial analyst, warned that heavy reliance on fee-based income and foreign-exchange gains may not be sustainable if those streams soften or prove volatile. His concern goes to the heart of ZamZam Bank’s next challenge. According to Aminu, a lender can post a breakout year through a favourable mix of commissions, service charges and revaluation gains, but sustaining high returns usually requires recurring earnings from a growing, well-performing financing portfolio and a stable funding structure.

Liquidity, by contrast, looked strong. Cash and bank balances were 6.51 billion Br, reserves at the Central Bank reached 1.60 billion Br, and short-term investments added another 507.2 million Br. Together, these liquid and near-liquid resources came to around 8.61 billion Br, equivalent to 51.9pc of total assets and about 74.1pc of customer deposits. Set against financial liabilities maturing within 30 days of 2.41 billion Br, immediate liquidity coverage was about 3.6 times.

The same caution appeared in the financing-to-deposit ratio, which fell to around 55.2pc from 67.32pc a year earlier. Financing accounted for only about 38.7pc of total assets. These numbers signalled ample liquidity and a sizeable cushion relative to earning assets. They also unveiled an untapped room to deploy more of the balance sheet into financing if the Bank can do so without compromising credit quality. A conservative asset mix protects liquidity and reduces immediate credit stress, but it can also weigh on the productive use of deposits if maintained too long.

The Bank’s expansion was not shaped solely by market demand. It had planned to disburse 6.2 billion Br during the year but ultimately disbursed 5.2 billion Br, about 83pc of the target, partly because regulatory caps imposed by the National Bank of Ethiopia (NBE) constrained financing activity. Collections, however, exceeded the plan. The Bank expected to collect 3.7 billion Br but ultimately collected 4.6 billion Br. That strengthened liquidity and discipline, but it also demonstrated how regulation can slow asset deployment even when demand and capacity appear to be building.

Credit quality held up better than might have been expected during such rapid growth. Non-performing financing remained at 2.23pc, within acceptable limits. ZamZam Bank expanded financing without obvious deterioration in repayment performance.

"These figures matter because the Bank’s future credibility will depend not only on rapid growth or on one year of standout profit, but also on whether it can maintain collections and asset quality as the book grows larger," said Aminu.

The operating footprint widened materially. ZamZam Bank opened 16 branches during the year, taking the total to 100, a 19pc increase. Permanent employees reached nearly 20pc to 893.

Hussien Kebede is a manager of the Alif Branch on Ethio-China Street in Wello Sefer. His branch serves major import and export clients and is ranked among the best performers. He shared his CEO's view of the year "as a turning point," acknowledging that digital performance fell short of expectations.

However, ZamZam Bank's digital record was mixed rather than weak. Its transactions accounted for 52pc of total transaction volume, up from 39pc the previous year.

Ansar, the Bank’s Sharia-compliant digital financing platform launched in December 2024 and powered by Kifiya Financial Technologies, is designed to offer fully digital financing applications for individuals and businesses, using AI-based evaluation tools and flexible repayment options. More than 670 million Br had reportedly been disbursed through the platform to over 15,000 users, while non-performing financing on the platform was at only 1.2pc as of January 31, 2026.

The contrast with Hijra remained instructive. Hijra Bank ended the year with 129 branches, compared with ZamZam’s 100, and a larger customer franchise of 931,147 account holders, compared with ZamZam’s 622,500. It also appears to have built a wider digital payments ecosystem, with 812,000 HalalPay wallet users and 353,000 mobile banking users.

ZamZam Bank's edge lay elsewhere, with larger assets, stronger earnings, deeper financing, and greater efficiency.

Foreign-currency business provided another support to income. The Bank posted 64.7 million dollars in foreign-currency mobilisation and earned 1.2 billion Br from commissions and service charges. Foreign-currency-denominated assets were 1.15 billion Br against foreign-currency liabilities of 123.9 million Br, leaving the Bank with a net long foreign-currency position. A 10pc move in exchange rates would imply about 102.9 million Br in gain or loss. That exposure was meaningful, but not destabilising, relative to the total equity of 3.58 billion Br.

Capital remained one of the Bank’s clearest strengths. Total equity represented 21.6pc of assets, almost unchanged from 21.7pc a year earlier, but applied to a much larger balance sheet. Paid-up capital reached 2.66 billion Br, ahead of Hijra Bank's 1.93 billion Br, giving ZamZam a thicker equity cushion and more room as both banks work toward the National Bank’s minimum capital requirement due in June this year.

ZamZam Bank's capital adequacy ratio reached 31pc, comfortably above the regulatory minimum. For a fast-growing bank with no year-end access to borrowing facilities, that capital buffer was the main protection against shocks.

According to analysts, the absence of borrowing facilities is worth noting, as leverage growth was not sustained by external funding lines, which could be read as a sign of balance-sheet discipline.

"It also left ZamZam Bank with a thinner contingency funding backstop if conditions tighten suddenly," said Aminu. "Heavy reliance on deposits can create maturity mismatch and liquidity pressures if withdrawals accelerate or asset deployment lengthens."

Melika dismissed these concerns, arguing that the Bank is comfortable as a deposit-funded institution, manages risk through its Asset & Liability Management Committee (ALMC), maintains a high capital adequacy ratio, and plans to increase Mudarabah deposits, maintain high liquidity, and eventually use Sukuk instruments to diversify funding risks.

That could matter because the Bank still occupies only a small corner of the banking industry. Its deposits amount to only 0.53pc of the 2.2 trillion Br held by private banks. The mix of the deposits is revealing. Wadiah deposits, or safe-custody accounts, were 6.45 billion Br, accounting for 55pc of total deposits. Qard deposits reached 4.5 billion Br, representing 39pc. Mudarabah profit-sharing deposits made up the remaining six percent, or 678 million Br.

For ZamZam Bank, this is evidence that fresh liquidity is entering the formal banking system from customers previously underserved by conventional finance.

Established to serve clients excluded from formal finance because services aligned with their religious values were unavailable, ZamZam Bank has shown that inclusion and profitability need not be mutually exclusive. But analysts see the next phase will be harder than the first.

Through aggressive share sales, ZamZam Bank raised about 2.5 billion Br in a few months, and shareholders approved a plan at a general assembly held at the Millennium Hall on Africa Avenue (Bole Road) in December to increase capital to 15 billion Br within five years. The Bank also plans to finalise registration with the Ethiopian Capital Market Authority (ECMA) and eventually list on the Ethiopian Securities Exchange (ESX).

Shareholders were pleased with the performance, according to Hassen Mohammed, founder and chief executive officer (CEO) of Hiya Real Estate which is also a founding shareholder and is now one of the Bank's major shareholders. He urged ZamZam Bank to move away from traditional banking practices that delay financing decisions, particularly for letters of credit.

"If management addresses such issues, the Bank could soon rank among the industry’s top performers,' Hassen told Fortune.

PUBLISHED ON Mar 07,2026 [ VOL 26 , NO 1349]