Oromia Bank reported a 49% jump in pre-tax profit to 3.82 billion birr for the 2025/2026 fiscal year, delivering sharp earnings growth even as liquidity pressures squeeze much of Ethiopia's banking sector.
Board Chairman Asfa Semee presented the results at the bank's 17th Annual Regular and 6th Extraordinary General Meetings, where he outlined how the institution navigated severe macroeconomic conditions.
The strong headline number stands against a difficult backdrop. According to the National Bank of Ethiopia's (NBE) latest Financial Stability Report, the sector-wide liquidity ratio stood at 30.4% — more than twice the regulatory minimum and the strongest reading in five fiscal years — yet the aggregate figure masks weakness at individual institutions. A liquidity stress test reported in the same document found that 16 commercial banks failed the regulator's liquidity sensitivity assessment for the fiscal year ending June 2025, an improvement from 20 banks the previous year.
The strain has already produced casualties elsewhere. Details of Global Bank of Ethiopia's difficulties remain largely undisclosed, though sector sources cited by Capital Ethiopia indicated a sudden erosion of deposits, especially time deposits, was a significant factor. Separately, the NBE removed former CEO Tesfaye Boru, effective July 28, 2026, after a special inspection found regulatory violations, and barred him for five years from senior executive or board roles in any Ethiopian financial institution.
Banking experts have warned that some institutions are masking fragility. Worku Lemma, a veteran financial expert and former senior banking executive, cautioned about risky deposit-gathering practices:
> "When you pay interest upfront, you are essentially generating artificial liquidity."
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The NBE's directive FS/SD/442/2026 already bans advance interest payments. In August, NBE Vice Governor and Chief Economist Fikadu Digafe said the central bank had established broader safeguards:
> "We have put instruments, codes of conduct, directives, and standing facilities that banks can use to fill their liquidity needs. There are also liquidity and reserve requirements."
Oromia Bank's profit figures come from a single source — the bank's own general meeting as reported by Capital Ethiopia — and no independent breakdown of what drove the earnings growth was available to The Abay Times. Without detail on whether the surge stemmed from expanded lending, fee income, or valuation effects linked to the birr's depreciation since the July 2024 float, it is difficult to assess how sustainable the improvement may be.
The result lands at a pivotal moment for Ethiopian banking. The birr's shift to a market-based exchange rate in July 2024 altered the operating environment, while the sector continues to expand — a planned Agricultural Bank is expected to begin operations within three months, according to Capital Ethiopia. Sector-wide, regulators face the challenge of maintaining stability as individual banks show uneven capacity to manage liquidity under the new monetary framework.
Sources: Capital Ethiopia.
