Ethiopia’s banking sector outperformed much of East Africa in 2024 with a 15.5% surge in net loans and advances to ETB 1.44 trillion, outpacing Kenya (13.2%) and Tanzania (11.8%) but trailing Uganda’s 18.4% jump, according to Deloitte East Africa’s 2026 Banking Industry Outlook.
Customer deposits grew 15.3% to ETB 2.49 trillion, keeping the loans-to-deposits ratio steady at 1.73 – stronger than Tanzania’s 0.85 but behind Kenya’s 0.92 efficiency. The Commercial Bank of Ethiopia (CBE) dominated, driving scale while piloting AI for regulatory compliance and efficiency gains.
Asset quality softened slightly, with non-performing loans (NPLs) rising to 3.9% from 3.6% amid 19.9% inflation – better than Zambia’s 6.2% and Malawi’s 7.1%, but pressuring ROE to 24.6% (down from 25.7%). ROA held at 2.0%, competitive regionally.
Ethiopia leads in AI pilots for fraud detection and document processing, joining Kenya’s Equity Bank (Eazzy app, 88% digital transactions) and Uganda’s Stanbic (SME AI advisory). Cloud migration is accelerating across the board: CBE shifts core systems; Rwanda’s Bank of Kigali targets 90% digital by 2025; Tanzania’s CRDB integrates smart branches.
Agency networks expand reach – Equity Kenya (50,000+ agents), ZANACO Zambia (30,000) – while interoperability like Kenya’s KE-QR and Ethiopia’s national QR standard boosts inclusion. Gen AI chatbots (e.g., Zambia’s FNB Protos, Kenya’s NCBA) cut costs and personalize services, though legacy IT and data silos slow progress in Ethiopia and Malawi.
Ethiopia’s banks eye sustained growth via diversification (bancassurance, micro-lending) and regulatory alignment (Basel III, ESG via ISSB standards by 2027). With foreign entry looming, digital-first strategies and risk management will define regional leaders.
