Ermias focused on making Berhan profitable and improving its return on equity, which had been in decline. 

"We implemented a turnaround strategy, boosting profits and reducing non-performing loans," Eligo told shareholders who met at the Millennium Hall, on Africa Avenue (Bole Road), in mid-October.

The strategy paid off, with earnings per share (EPS) rising to 350.33 Br, surpassing the previous year's 15.6pc and exceeding the industry average of 31.6pc. 

The London-based financial analyst Abdulmenan Mohammed (PhD) credited management's strategic maneuvers with the growth.

"Such a leap testifies to Berhan's management focus and determination," he told Fortune. 

The profit surge was driven by increased revenues from financial and non-financial intermediation activities and a noteworthy reduction in provisions for loans and asset impairments. This was to be a defining factor, shifting from an expense of 311.15 million Br to an income of 66.92 million Br.

"It reflects prudent risk management," said Abdulmenan. The change boosted profitability and improved the Bank's return on assets (ROA) to 3.28pc from 1.34pc in June 2023. Total income rose by 27.3pc to 6.5 billion Br, while interest income from loans, advances, and Central Bank bond sclimbed 16.4pc to 5.11 billion Br. Fees and commissions saw a substantial rise, with net revenues surging 73.9pc to 756.72 million Br. Other operating income nearly doubled to 438.26 million Br. 

Operating expenses, too, rose substantially by 11pc to five billion Birr. Interest expenses grew by 12.5pc to 1.8 billion Br. Wages and benefits shot up 28.7pc to 2.08 billion Br., and combined with administrative expenses, rose from 57.7pc to 62.7pc of total costs, signalling investments in workforce expansion and branch development.

Analysts caution that such increases could impact profitability if not matched by revenue growth. Abdulmenan cautioned that wage costs have surpassed interest expenses, raising questions about expenditure management. 

"Balancing operational expansion with revenue growth will be crucial for maintaining profitability," he said.

Ermias concurred that the expenses were part of a deliberate strategy. He acknowledged that the Bank's biggest expense should be interest-related but disclosed that hiring non-clerical staff full-time instead of outsourcing contributed to higher costs, including benefits. 

"It's company policy and part of our corporate social responsibility," he told Fortune.

Although Berhan Bank saw costs climb, executives followed a cost-containment strategy. The asset growth appeared somewhat restrained, with total assets inching up by only 2.2pc to 46.02 billion Br. During the fiscal year, outstanding loans and advances grew by a modest 6.8pc, hitting 29.2 billion Br, well below the lending cap established by regulatory authorities. 

Berhan Bank's capital base strengthened, with paid-up capital growing by 2.9pc to 3.45 billion Br, contributing to the rise in EPS. The Bank maintained non-distributable reserves of 4.62 billion Br and a capital adequacy ratio of 15.8pc, nearly double the regulatory minimum.

Its capital-to-asset ratio increased from 11.16pc to 13.5pc, conforming with the industry average. The bolstered capitalisation improved the Bank's resilience against economic shocks and met regulatory capital adequacy requirements, positioning it favourably for further growth.

Incorporated in 2009 with 97 million Br in paid-up capital raised from 12,000 shareholders, Berhan Bank has grown over the years. The equity base has expanded to 18,000, including shareholders like Yared Sisay, who bought shares for his children to secure a long-term asset. While he observed that Berhan Bank had been lagging behind its peers, he sees recent improvements in management and cost optimisation as promising. 

"They’ve a lot of work to do," he told Fortune. "But I'm happy now."

Yared urged the Bank’s executives to focus on building an asset portfolio, including constructing a headquarters on recently acquired land. He attributed the streamlined annual report to progress and a move away from unnecessary expenditures. 

However, its asset-to-equity ratio declined from 8.96 to 7.41, revealing a strategic move towards reduced leverage and improved equity levels. It surpasses the industry's average leverage ratio of 7.8 times. Industry analysts attribute the  drop to the executives' focus on financial stability, providing a stronger equity buffer against potential losses. 

The Bank’s net profit margin on total assets soared from 1.13pc to 2.58pc, marking a 128pc increase. This contrasted well with the private banking industry’s average return on average assets (RoAA) of 2.6pc between 2013 and 2022, which had dipped to 2.4pc in 2022. 

Berhan Bank's profitability growth revealed effective asset utilisation and operational efficiency, given the industry's recent focus on income from foreign exchange operations over asset-heavy lending.

Nonetheless, its net interest income as a share of total income declined slightly from 54.31pc to 50.77pc, unveiling a diversification of income streams and reduced reliance on traditional interest income. The industry has seen an increasing dependence on interest income, accounting for 65pc to 73pc of total income, signalling a continued focus on lending as the primary revenue driver. 

Loan growth at Berhan was 6.79pc, aligning with the executives' strategic focus on credit expansion, though it lags behind the industry's 37.2pc increase in 2022. Deposit mobilisation rose by 9.09pc, unveiling strong customer confidence but again falling short of the industry's average annual increase of 28.9pc. Despite this, Berhan Bank's deposit per branch reached 96.2 million Br, surpassing the industry's average of 79.8 million Br, indicating strong branch-level performance.

The Bank expanded its network with 17 new branches, bringing the total to 383. 

Berhan Bank's profit per employee nearly doubled, rising from 91,959 Br to 197,903 Br. The productivity improvement outpaces the industry's average of 76,000 Br, demonstrating effective workforce management and operational efficiency. 

One notable branch is the Megenagna location at Marathon Mall, managed by Habtamu Dita. The branch caters to high-net-worth customers, such as pharmaceutical manufacturers, and benefits from policies that provide domestic manufacturers with up to 55pc of foreign currency payments for inputs. 

"We've also focused on customer retention," Habtamu told Fortune.

Promoted to a cluster manager, he noted dramatic improvements in communications between branch offices and the head office, enhancing client service efficiency. 

However, Berhan Bank's year-on-year growth presented a mixed yet optimistic picture. 

Total assets grew modestly by 2.17pc to 46.02 billion Br, a cautious expansion compared to the industry's substantial annual growth rate of 20pc to 25pc. However, the Bank's position at Berhan Bank. 

Under his watch, the Bank’s loan-to-deposit ratio slightly decreased from 80.95pc to 79.24pc, improving liquidity and reflecting conservative lending practices, while the industry's ratio stood higher at 83.7pc.

Despite the improvements, Abdulmenan advised that the executives should be concerned about the stagnation in deposits at around 37.4 billion Br from 33.7 billionBr.