Traditional Banks - Ethiopia

Ethiopia

In 2024, the net interest income in the Traditional Banks market market in Ethiopia is forecasted to reach US$5.20bn.
It is worth noting that Traditional Commercial Banking holds the dominant position in this market segment, with a projected market volume of US$3.15bn in the same year.
Looking ahead, the net interest income is expected to exhibit a compound annual growth rate (CAGR 2024-2029) of 5.26%, resulting in a market volume of US$6.72bn by 2029.
When comparing these figures on a global scale, it is noteworthy that China will generate the highest net interest income, amounting to US$3,869.0bn in 2024.
Traditional banks in Ethiopia are facing increased competition from digital banking solutions, forcing them to adapt and innovate in order to stay relevant in the market.

Key regions: Germany, United Kingdom, France, Japan, China

Definition:

The Traditional Retail and Commercial Banks market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.
The traditional banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. These banks have a long history of serving customers and have established relationships and a deep understanding of the financial needs of their communities. They offer a wide range of services and are able to provide personalized advice and support to their customers.
In this market, banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. However, they also face challenges, such as increased competition and changing customer preferences, which are driving the need for continuous improvement and adaptation.
Overall, the traditional retail and commercial banking market provides a wide range of financial services to both individuals and businesses through established, trusted channels and continues to play a vital role in the financial landscape.

Structure:

The market consists of two segments:
- The Traditional Retail Banks market refers to financial services provided to individual consumers (e.g., personal loans, savings and checking accounts, credit cards, mortgages).
- The Traditional Commercial Banks market refers to financial services provided to businesses, including small and large enterprises (loans, lines of credit, other financial products specifically designed for businesses).

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

Ethiopia, known for its rich cultural heritage and diverse landscapes, is also home to a rapidly evolving Traditional Banks market.

Customer preferences: Customers in Ethiopia are increasingly turning to Traditional Banks for their financial needs due to a growing trust in established banking institutions. This shift in preference can be attributed to the desire for security and stability offered by traditional banks, especially in comparison to emerging fintech solutions.

Trends in the market: One prominent trend in the Traditional Banks market in Ethiopia is the expansion of banking services to rural areas. Traditional banks are leveraging technology to reach unbanked populations in remote regions, offering a wide range of financial products and services. This trend is driven by the government's efforts to promote financial inclusion and stimulate economic growth across the country.

Local special circumstances: Ethiopia's Traditional Banks market is also influenced by unique local circumstances, such as the dominance of state-owned banks. These institutions play a significant role in the country's banking sector and often set the tone for industry practices and regulations. Additionally, cultural factors and traditional banking practices shape customer behavior and expectations in Ethiopia.

Underlying macroeconomic factors: The growth of the Traditional Banks market in Ethiopia is supported by favorable macroeconomic conditions, including steady GDP growth and increasing foreign direct investment. As the economy continues to expand, traditional banks are well-positioned to cater to the evolving financial needs of businesses and individuals alike. Moreover, regulatory reforms aimed at enhancing transparency and efficiency in the banking sector are driving further development and innovation in the market.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.