In its second year of operations, Ahadu Bank has achieved remarkable success, including guaranteed profitability.
The bank, which began operations two years ago, reported that it excelled in all areas of the sector’s operations during its second year, which concluded on June 30, 2024.
In its annual report, presented at the general assembly on Saturday, October 30, at Millennium Hall, the bank announced a revenue of 1.15 billion birr, marking a 690 percent increase since its inaugural year.
The report indicated that the bank’s earnings for the year exceeded its annual targets. A significant portion of the newly established financial institution’s revenue stemmed from non-interest income, influenced by the regulatory body’s strict limits on new loans.
Commission and service fee income accounted for over 59 percent of total revenue, while interest income represented more than 32 percent, according to the annual report.
Ahadu’s total capital reached 994 million birr, reflecting a substantial growth rate of 103 percent compared to the previous year. Additionally, its paid-up capital increased by 53 percent, surpassing one billion birr.
“This growth highlights the bank’s efforts to strengthen its capital base and meet supervisory requirements ahead of schedule,” the report stated.
The bank’s asset position rose by more than 3.3 billion birr in just one year, marking another significant achievement for the institution, which has nearly 10,000 shareholders. By the end of June 2024, the bank’s total assets had grown by over 107 percent, reaching 6.4 billion birr.
More than one billion birr was allocated for operating expenditures during the reporting period, enabling the bank to report an unprecedented increase in income.
Industry analysts noted that while sector expenses have surged in recent years, Ahadu, as a newcomer, faces additional challenges in making substantial but essential investments to solidify its foundation. In the reported year, the bank’s expenses increased by 150 percent compared to the previous year. Personnel expenditures were the largest at over 47 percent, followed by interest and general expenses.
Despite local and global challenges, such as the loan cap imposed by the National Bank of Ethiopia, which rendered the market less favorable, the bank reported a positive outcome for the year.
With an earnings per share of nearly ten percent, the bank managed to offset its first-year loss, achieving a gross profit before taxes of 120 million birr.
In its first year, the bank experienced a loss of 267.6 million birr, which is typical for the industry.
During the review period, Ahadu increased its customer base by 250 percent, reaching approximately 704,000 depositors. As of June 30, the bank operates 104 branches, with 55 percent located in Addis Ababa.
