– CBE Holds Nearly Half of Sector’s Assets
The recently published Financial Stability Report by the National Bank of Ethiopia (NBE) disclosed that the financial sector continues to face concentration risk across market share, top depositors, liquidity, and sectoral/urban loan distribution.
The trade sector, both local and international, remained the primary beneficiary of bank credit, increasing its share of total outstanding loans to 41.5 percent by June 2025. Conversely, the manufacturing sector’s share fell from 23 percent to 16.2 percent during the same period.
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The report also disclosed that the Commercial Bank of Ethiopia (CBE), which recently received World Bank support after facing serious financial challenges, dominates the country’s banking sector. It accounted for 49.1 percent of total assets, 51.7 percent of loans and bonds, and 48.1 percent of deposits.
While the bank successfully passed all major stress tests (covering credit, liquidity, and foreign currency exchange risks), the report warns that its “creeping dominance” has pressured smaller banks, causing them to lose market share and raising the prospect of future consolidation in the sector.
Similarly, Ethiopia’s state-owned insurance corporation accounts for 33.9 percent of the market share in the general insurance business. According to the report, total loans and advances reached 3 trillion birr, a 38.6 percent increase, while deposits rose 40.7 percent to 3.5 trillion birr.
Acknowledging the rising concentration risk in the banking sector—specifically regarding market share, top depositors, liquidity availability, and sectoral and urban loan distribution—the report notes that these developments “require policy measures to manage such increasing risk.” However, the report also argues that the share of the top ten borrowers in total loans and advances decreased marginally during the review period. These “top ten” borrowers, primarily state-owned enterprises and regional governments, saw their share drop from 14.7 percent in the previous fiscal year to 12.4 percent. For context, the 2024 Sustainability Report revealed that the top ten borrowers accounted for 23.5 percent of all industry-wide loans and advances in 2023.
The report highlights a significant expansion in digital financial services, with total transaction values reaching 18.5 trillion birr—nearly double the previous year—but notes rising cybersecurity and operational risks associated with the growth of digital platforms. Furthermore, the industrial sector’s share of GDP rose to 29.8 percent. External accounts strengthened, with exports up 119.2 percent, remittances rising 13 percent, and foreign reserves increasing by over 209 percent. On the other hand, the exchange rate increased by 151.4 percent Following foreign exchange reforms, resulting in the Birr losing over 60 percent of its value against the dollar.
