BH Bank’s financial statements for the year ended December 31, 2025 leave little room for optimism. Despite strong deposit growth and an expanding investment portfolio, the bank posted a net profit of just TND 39.8 million, down sharply from TND 70.4 million in 2024, a decline of 43.5%.
Earnings per share fell to TND 0.835 from TND 1.479 a year earlier. The message is clear: the bank’s financial model is under structural pressure.
Net banking income barely holds up
Net banking income (NBI), the difference between banking operating income and expenses, stood at TND 692.6 million, down 1.2% from the restated TND 701.2 million recorded in 2024.
This modest decline masks troubling underlying trends. Interest income and related revenues, the main pillar of NBI, fell 7.2% to TND 963.2 million from TND 1.038 billion in 2024, reflecting a shrinking loan portfolio and deteriorating asset quality that required the suspension of interest recognition on classified loans. Fee income also declined by 6.7% to TND 148.9 million.
The main factor cushioning the decline was the strong performance of the investment portfolio, largely composed of Treasury bonds, whose income surged 41.7% to TND 289.8 million. Without this bond portfolio boost, NBI would have suffered a much steeper decline.
Risk costs erode profitability
The main drag on profitability in 2025 was the cost of risk. Net loan-loss provisions rose 7.2% to TND 326.2 million, compared with TND 304.2 million in 2024.
Measured against NBI, the cost of risk absorbed 47.1% of net banking income, an exceptionally high proportion that left little room to cover operating expenses.
Total accumulated provisions on the loan portfolio reached TND 1.484 billion, supplemented by TND 421.1 million in reserved accrued interest, bringing the total latent burden to TND 1.905 billion against a gross loan portfolio of TND 12.223 billion.
Operating expenses surge
Personnel expenses increased 9.2% to TND 206.9 million, while general operating expenses jumped 24.4% to TND 89.2 million.
The cost-to-income ratio, which measures operating expenses relative to NBI, stood at 45.4%—a manageable level in isolation. However, when combined with the cost of risk, these expenses consumed 92.5% of NBI, leaving almost no room to generate profits.
Worrying financial ratios
Return on equity (ROE) collapsed to around 2.9%, down from more than 5% in 2024 and well below an economically sustainable level.
Return on assets (ROA) fell to 0.26%.
Non-performing loans (categories 2, 3, 4 and 5), calculated on total gross exposures including off-balance-sheet commitments, amounted to TND 2.928 billion out of TND 14.120 billion in total exposure, resulting in a non-performing loan ratio of 20.7%.
The coverage ratio, including provisions and reserved accrued interest, stood at 65.1%, considered insufficient to absorb an additional shock.
One positive aspect of the balance sheet was customer deposits, which increased 11.3% to TND 10.029 billion, strengthening the bank’s funding base.
Audit report raises major concerns
The external auditors issued a qualified opinion—a rare and serious warning sign.
They highlighted three formal reservations:
• Significant weaknesses in the information system that limit the reliability of financial reporting.
• The questionable capitalization of expenses that should have been recognized as costs, including TND 42 million capitalized for the T24 IT project launched in 2019 and still not operational, compared with the system’s acquisition cost of TND 32 million.
• The absence of a comprehensive collateral database, reducing the reliability of provision assessments.
In an emphasis-of-matter paragraph, auditors also pointed to:
• Exposure of TND 479 million to a single counterparty undergoing collective insolvency proceedings, only partially covered by TND 263 million in provisions.
• TND 2.278 billion in exposures to state-owned enterprises backed by government guarantees, for which no final decisions had yet been received.
A Bank at a crossroads
BH Bank entered 2026 in a weakened position. Profitability is being squeezed by persistently high risk costs, rising expenses and structurally pressured interest income.
While the bank maintains a solid funding base thanks to strong deposit collection, the qualitative concerns highlighted by auditors underscore the need for deep reforms in risk governance and information systems before the situation deteriorates further.
