Despite registering a loss in its first year of operation Hijra Bank, one of the two pioneering full-fledged interest free banks (IFB), has stated that it is in a good position with regards to its other activities.
The bank which operated for ten months in the 2021/22 financial year stated that in the reporting period which closed June 30, 2022, it has enabled to mobilize over a billion birr in deposit.
In the financial year, the bank mobilized 1.34 billion birr in deposit, while during its ten month operation it managed to open 40 branches including the capital as well as other cities across the country.
The board of directors’ brief report indicated that in the first six months of the operational period, the bank was working aggressively to expand its branches which contributed to the amassing of significant amount of deposit from customers.
Similarly, the report cited that the bank also provided service to almost 135,000 customers with different accounts which it introduced.

As of June 30, Hijra’s total asset stood at almost 2.3 billion birr and of that, 989 million birr was cash while the balance was with banks. Of that, 440 million birr was aligned with short term investment, and 284 million birr was allocated for building and office furniture.
It can be recalled that before its inception, Hijra bought a nine story building at a 130 million birr cost.
Regarding liability, the amount in the first year sat at 1.4 billion birr with the lion share going to depositors.
At the end of the year, the bank’s total capital has sat at 862.5 million birr.
Regarding revenue, in its ten months of operation, the bank has secured 27.6 million birr and 19.1 million birr stemming from financing and investment followed by commission and fees that amounted to 7.4 million birr.
However, in the period the bank’s total expense was 170.6 million birr which is more than six folds when compared to its revenue.
As the sector experts explain, this instance is not a surprise particularly for such kinds of unusual financial institutions, that is, IFBs.
From the total of over 170 million birr expense, the employee salary and benefit consumed 97.4 million birr while the operational expense came in second with a 44 million birr expense.
The annual report explained that from the ten months operation, the first six months was a period where the bank worked aggressively to expand its branches whilst focusing on mobilize deposit, “as a full-fledged IFB, the major source of revenue comes from profit share of financing. To obtain that, expanding branches and mobilizing savings was a priority.”
The bank reported that it was engaged on financing in the last four months of the financial year, due to that its revenue stood at a lower position when contrasted with its expenses.
In the year under review, the bank registered a 143 million birr loss, while the report argued that some of the major expenses are long term investments that would make the bank reap benefits in the future.
According to the report, the bank has developed an in-house five year strategy which is already under implementation.
As a challenge the bank mentions, lack of skilled labour on Islamic banking, lack of awareness, inflation, stiff competition in the sector and instability as its hurdles in the report.