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Ethiopia’s Banks Aren’t Really Growing -The Currency Is Shrinking

Ethiopia’s banks are reporting record growth in Birr terms. But once you adjust for the currency’s steep devaluation, the story changes completely. In dollar terms, the sector isn’t expanding it’s shrinking.

Gemechu Birehanu Bekana
5 min read
Ethiopia’s Banks Aren’t Really Growing -The Currency Is Shrinking

Ethiopia’s banking sector looks like it’s on fire.

Assets are up. Deposits are up. Profits are up.

Every headline tells the same story: growth.

But that story falls apart the moment you ask a simple question:

Growth in what?

Because when you stop looking at Birr and start looking at dollars the picture flips completely.

According to the National Bank of Ethiopia, total banking assets rose from about 2.8 trillion Birr in 2023 to 4.7 trillion Birr in 2025. Deposits climbed to 3.5 trillion Birr. Profits nearly doubled to 93.4 billion Birr. On paper, this looks like a sector expanding at remarkable speed.

And that’s exactly the problem.

Now look at the same data in dollars.

NNNN.png Source: NBE, 2026

  • Total assets: $52.3 billion (2023) → $57.5 billion (2024) → $34.6 billion (2025)
  • Deposits: $39.8 billion → $43.8 billion → $25.6 billion
  • Net profit: $0.90 billion → $1.02 billion → $0.68 billion

That’s not growth.

That’s contraction.

A sharp one.

What changed wasn’t the banking system overnight. It was the currency.

In just two years, the Birr moved from around 54 per dollar to 137 per dollar. That kind of shift doesn’t just distort numbers it rewrites them.

When the currency weakens this fast, everything measured in it starts to look bigger. Balance sheets expand. Revenues rise. Profits increase.

But the underlying value doesn’t. You’re not looking at real growth. You’re looking at inflated numbers chasing a weaker unit of account.

This is the kind of illusion that’s easy to miss and dangerous to believe.

Because if you only read the Birr figures, you conclude that:

  • Banks are stronger
  • The financial system is deepening
  • Profitability is improving

But in dollar terms, the system is smaller, not larger. Less capable of financing imports. Less comparable globally. Less attractive to foreign capital.

That gap matters. Especially now.

Ethiopia is opening up. Capital markets are being built. Foreign investors are watching. And when they look at Ethiopian banks, they won’t look at Birr.

They’ll look at dollars.

And what they’ll see is not a sector that doubled in size but one that just lost a significant portion of its real value in a single year.

None of this means the banking sector is collapsing. It isn’t.

Banks are still mobilizing deposits. Credit is still expanding. The domestic system is active.

But the narrative needs to be corrected.

Because right now, we are confusing nominal expansion with real progress.

And those are not the same thing.

The uncomfortable truth is this: The numbers are growing. The value is not.

And until that distinction becomes part of the conversation, we will keep celebrating growth that doesn’t actually exist.