Hibret Bank S.C. has posted a net profit of only 23.5 million birr for the 2024/25 financial year, a collapse from more than 3 billion birr a year earlier, with the new leadership implicitly blaming policy missteps and risk-taking under the previous administration for the dramatic downturn, even as peer banks announce multibillion-birr profits.
According to the bank’s audited financial statements, profit before tax fell to 749 million birr in 2024/25, down from 3.08 billion birr in 2023/24, while net profit crashed to 23.5 million birr after a hefty tax charge. This reversal comes in a year when other major private banks in Ethiopia have reported strong double digit profit growth and have declared significantly higher profit figures in nominal birr terms, underscoring how Hibret has underperformed its peers despite operating in the same macroeconomic environment.
The report shows that total revenue actually grew by 26.6 percent to 16.74 billion birr, but this was overwhelmed by a 57.6 percent surge in total expenses to nearly 16 billion birr, eroding the bank’s earnings capacity.
“While the board’s narrative is measured, the numbers highlight the consequences of decisions taken under the former administration, particularly in foreign currency management and balance-sheet positioning ahead of Ethiopia’s move to a floating exchange rate in July 2024,”experts, who saw the annual report, told Capital.
The bank booked a foreign-exchange revaluation loss of 3.76 billion birr during the year—linked to a mismatch between foreign currency assets and liabilities—more than wiping out the benefit of strong income growth and pushing profitability to the brink.
Analysts say such a large open position suggests that earlier management did not adequately hedge or rebalance exposures in anticipation of liberalization, leaving the new leadership to absorb the full impact once the regime changed.
In addition, the sharp rise in operating and interest expenses points to cost structures and funding strategies inherited from the previous team that were not aligned with a more volatile, market based environment.
The board’s report reveals that a Crisis Management Committee was set up during the year and that a new chief executive officer was appointed in August 2025 to spearhead corrective measures and restore profitability.
Management has begun tightening cost controls, recalibrating the branch network by closing loss-making outlets, and prioritizing risk management to stabilize earnings after the foreign-exchange shock.
Despite the profit slump, Hibret expanded deposits to 92.68 billion birr and grew its loan book to 79.33 billion birr, signaling that the franchise remains commercially viable if legacy imbalances can be corrected.
The bank’s capital base, with paid up capital of 8.12 billion birr and a risk weighted capital adequacy ratio of 11.7 percent, continues to sit above regulatory minimums, giving the new leadership some room to work through inherited losses.
At upcoming general meetings, shareholders are expected to demand clearer accountability for how profit fell from 3 billion birr to near break-even in just one year while competitors surged ahead.
Many will likely question the previous administration’s foreign currency strategy, cost discipline and readiness for regulatory shifts, arguing that these legacy choices are now constraining dividend prospects and depressing returns on equity.
For the new management, the challenge will be to convince investors that the worst of the cleanup is behind the bank and that, with tighter governance and a more cautious risk appetite, Hibret can rejoin the ranks of Ethiopia’s top earning private banks in the coming years.
It is recalled that Melaku Kebede stepped down as CEO of Hibret Bank in August 2024 after serving in the role for four years.
His unexpected resignation came just three weeks after the government launched a major macroeconomic reform program, which included floating the foreign exchange rate to allow market forces to determine its value.
The departure also followed a period of considerable difficulty for Hibret Bank, which had been adversely affected by a substantial net open position.
This performance stood in sharp contrast to most other financial institutions, including newer market entrants, which reported strong operational results during the first year of the reform period.
