The Bank's total assets decreased by 12pc to 67 billion Br, signalling pressure on a balance sheet that had once tracked consistently with the broader industry’s expansion. Its deposit base contracted by 24.1pc to 45.1 billion Br, contrasting with the trend observed at many other private banks, where deposit mobilisation has generally held up despite inflationary headwinds. Over the last decade, private banks have seen moderate to robust deposit growth, which they have channelled into new loans. 

At NIB, these pillars weakened during the year as the Bank scrambled to replace outflows with external financing, demonstrated by borrowings that jumped by over 105pc. The growing reliance on external funds has come with added costs, creating what executives recognise as a short-term measure they hope to ease as more stable deposits return.

Abdulmenan Mohammed (PhD), a finance analyst based in London, has called for a strategic overhaul to reverse the downward trend, as this decline has likely unsettled shareholders. 

"The performance ought to be disappointing, if not shocking," he said. 

However, the newly appointed President of NIB, Henok Kebede, remained optimistic that the Bank’s strategic realignment, from attracting longer-term deposits to streamlining its credit portfolio, will improve the situation. Executives see technology as key to regaining a competitive edge and drawing new accounts.

“The customer base has now been significantly increased,” Henok told Fortune. 

However, liquidity remained an ongoing concern. Cash and bank balances dropped by 48pc to 6.27 billion Br, while the liquid assets-to-total-assets ratio slipped to 9.4pc from 15.7pc. Executives conceded that the loan-to-deposit ratio of 109.2pc was higher than the Bank’s internal threshold, and above the previous year's 89.8pc. The heavy borrowings, which more than doubled to 5.33 billion Br, unveiled the liquidity pressures.

According to the President, NIB is now in the process of settling overdue commitments, including borrowings, and expects the ratio to fall closer to industry norms. Across the private banking industry, the loan-to-deposit ratio generally stayed closer to 80pc. While NIB's total outstanding loans and advances declined by about nine percent to 48.47 billion Br, the majority remain concentrated in the construction and manufacturing sectors. 

Analysts saw the aggressively pursued lending activities as a double-edged sword. While they may have presented opportunities, they can also pose heightened risks if an industry-specific slowdown arises.

NIB executives remain confident that a system is in place to manage credit risk, pointing to ongoing monitoring and a commitment to allocate loans to reliable borrowers who can generate the needed liquidity. According to the President, the Bank’s lending approach is built around partnering with borrowers who can generate steady cash flow. He believes these strategic partnerships can reinforce liquidity. 

"NIB’s internal risk appetite allows it to maintain a balanced approach to sectoral exposure," Henok told Fortune.

Profitability metrics uncover the strain. 

Net profit declined by 49.6pc to 957.9 million Br, positioning Nib behind newer players such as Berhan Bank, which posted 1.19 billion Br, and Abay Bank’s 1.5 billion Br. Return on Equity (RoE) fell from 27.7pc to 14.1pc, while Return on Assets (RoA) slipped by one percentage point to 1.7pc. Most private banks have shown consistent double-digit asset growth and improved profits over the past decade. NIB, however, experienced a contraction in its net profit margin on total assets to 1.43pc, signalling a noted departure from this industry-wide trend. 

The Bank’s dependence on interest income, which accounted for almost 89pc of overall earnings, also revealed a concerning issue. There is less of a buffer from non-interest-based revenue sources, which many other banks leveraged to diversify their income. The environment dissuades some depositors from parking large sums in bank accounts, but NIB has felt the effects more directly than many of its peers.

Executives say that they recognise depositor confidence needs rebuilding. Indeed, NIB has been susceptible to negative real interest rates, as inflation was about 19.9pc year-on-year (YoY). 

Despite the difficulties, NIB increased its paid-up capital to 7.6 billion Br, raising its capital-to-asset ratio to 15.47pc, compared with 11.53pc a year earlier. This injection offers a stronger cushion against systemic shocks and positions NIB to meet regulatory requirements comfortably. The Bank’s executives see this development as a foundation for restoring stability.

Some cost control measures appear to be paying off, although higher administrative outlays, attributable to governance changes and operational adjustments, raised total costs. 

Private lenders have increasingly outpaced state-owned competitors in loan disbursements in the broader banking industry, expanding their networks and product offerings to attract deposits and borrowers. NIB remains among the sizable credit providers, holding a loan portfolio of 49.2 billion Br, yet its deposits per branch trail the industry average.

With deposits per branch at about 102 million Br, Henok says the Bank will focus on digital banking enhancements, including partnerships with fintech providers, to give customers more efficient and innovative banking experiences. Though the total branch count remains at 441, some offices were relocated to more visible or accessible areas, and three conventional branches were converted to full-fledged interest-free banking services in response to shifting market preferences. One was reverted to a conventional branch for the same reason.

According to Gizachew Abebaw, manager of the Bank’s premium branch at the Head Office, on Dejach Wolde Michael St., the Bank has undergone changes since March, spurred by a leadership team intent on identifying and catering to high-value clients. He acknowledged that recent governance issues, widely covered in local media, briefly unsettled some customers. 

“They paused for a moment,” he said, describing a period when operational disruptions forced many to re-evaluate their banking options. “But it was temporary.” 

The premium branch, overseen by Gizachew, offers specialised services to top-tier clients, including on-site service deliveries for large transactions. He reported robust progress in resource mobilisation, digitisation initiatives, and foreign exchange investments, attributing these as indicators of the Bank’s ongoing recovery.

“We’re on an upward trajectory,” Gizachew said. 

He is confident that NIB Bank’s renewed focus on high-value account holders will reinforce its position in the industry. 

His senior executives have introduced a 120-day liquidity recovery plan designed to revitalise deposit flows, refine governance structures, and tighten costs. The President attributed much of the pressure to surges in the cost of funds, prompting the Bank to focus on rebalancing its deposit mix. The aim was to secure more stable sources by attracting new customers willing to maintain deposits for longer periods.

According to Henok, these efforts have already led to a substantial expansion of the customer base, which he hopes will stabilise the deposit profile over time. 

The past fiscal year also saw the Bank’s Earnings per Share (EPS) halved to 70 Br. The decline can be attributed to a combination of lower profitability and the capital boost that spread earnings more thinly across shares.

However, provisions for loan and other asset impairments rose to 401.8 million Br from 104 million Br, revealing more cautious risk assessments. Wage expenses and operating costs climbed considerably as well. Interest expenses reached 4.44 billion Br, a 36.6pc rise, while wages and benefits increased by 15.5pc to 2.91 billion Br. Other operating expenses jumped to 1.76 billion Br, 67.6pc growth. 

Costs expanded faster than revenues, hitting 9.6 billion Br and reducing net profits. Losses from foreign exchange dealings more than doubled, reaching 256.25 million Br, and penalty expenses soared to 140.25 million Br from a mere 3.9 million Br the previous year.

A further complication came from a prior year adjustment of over one billion Birr, surpassing last year’s net profit and pushing retained earnings into negative territory at 378.17 million Br. The adjustment was attributed to several factors, including the application of incorrect exchange rates on a Letter of Credit (LC) payment, an expanded severance pay reserve calculation, unrecorded fees for MasterCard and VisaCard services, and an exchange rate regime shift that affected a dollar payment. 

This revelation led to an overstatement of earlier earnings and dividends, making dividend payments for shareholders unattainable in the current year. Analysts expressed concern about the scale of these adjustments and called for careful review to ensure that the Bank's financial statements accurately reflect its standing.

“Management should provide an adequate explanation for this,” said Abdulmenan. 

According to Henok, improved controls and oversight are in place, arguing that many of these additional outlays are tied to cleaning up legacy issues and making the Bank more efficient in the long run. 

The President stated that NIB’s capital structure is still robust, with a capital adequacy ratio of 19.8pc, more than double the regulatory minimum. While current standards are being met, he wants to strengthen capital further for the Bank to respond to unanticipated shocks and continue expanding. He also sees balancing the push to grow capital with preserving shareholder returns as important.

Incorporated 25 years ago with a paid-up capital of 27.6 million Br raised from 717 founding shareholders, NIB increased its paid-up capital by 26pc to 7.6 billion Br. Its capital adequacy ratio (CAR) stood at 19.8pc, more than twice the regulatory minimum. According to Henok, while the capital structure meets acceptable standards, it needs further strengthening to establish a strong capital base. 

“We’re working to further strengthen capital base without compromising the returns to the shareholders,” he said.

Shareholders convened at Millennium Hall, where they learned that dividend payouts would not be possible this year, were disappointed. The news arrived at a time when NIB was restructuring its corporate governance and senior managment team, following the departure of more than a dozen senior staff and directors. A new board chaired by Shisema Shewaneka briefly appointed Emebet Melese (PhD) as president; she later moved to the Development Bank of Ethiopia (DBE), the state policy bank, making way for Henok to take the helm two months ago.

Henok brings two decades of industry experience, having served at the state-owned Commercial Bank of Ethiopia (CBE), Dashen Bank, and as founding president of Amhara Bank, where he spent two years. A graduate of management and international business studies from Addis Abeba and Greenwich universities, he took the reigns at NIB at a moment when the Central Bank’s tight monetary policy influences borrowing costs and pushes banks to compete more aggressively for deposits. 

For longtime shareholders like Nigussie Ambo, who has held shares for over a decade and has not attended the annual meeting, the situation was disheartening, especially since no dividends were declared this year.

“I held a negative view,” he told Fortune, speaking of his absence.

He recalled signing forms related to the capital market initiative and learning the news about the Bank’s earnings shortfalls. Although he worried that the departure of experienced staff could affect the Bank’s future, he remained hopeful that fresh leadership and employees would be willing to undertake the hard work required to restore the Bank's reputation. 

“I don’t expect an immediate solution,” he said. “I believe NIB can return to its former glory, provided the new team is willing to dedicate themselves to the necessary hard work.”

Another shareholder, Haimanot Tessema (MD), who has held shares for seven years, attributed the dividend loss to "historical mismanagement." 

“Our dividends went away to mask the mismanagement of the previous leadership and their associates,” he said.

He called the new board and executives to ensure qualified professionals fill key roles and that strict oversight prevents past mistakes from resurfacing. The management team acknowledged these concerns and pledged a thorough review of prior practices while promising a merit-based approach, prioritising stability and sustainable growth. Henok disclosed that risk management structures have been upgraded, credit policies refined, and international best practices more closely followed. He revealed plans for revenue diversification, potentially through capital market ventures that allow for expanded product lines.

According to Henok, NIB has increased interest income by 20.9pc to 9.65 billion Br, primarily from loans and treasury investments. Fee and commission income rose to 713.34 million Br (11.4pc growth), helping total income climb by 21.3pc to 10.8 billion Br.