Tunisia is considered one of the Arab pioneers in Islamic finance, with the establishment of Al Baraka Bank Tunisia (BAT) in 1983, the country’s first institution of its kind.
Zitouna Banque in 2010 and Wifak International Bank (WIB) in 2015 completed this segment, which is now governed by Law 2016-48 that officially incorporated participatory banking into Tunisian law.
Based on the prohibition of “riba” (interest) and on profit-and-loss sharing, these three institutions remain minor players in a banking sector exceeding 185 billion dinars in assets (compared to TND 4.7 billion for the three Islamic banks combined), despite real social demand and strong growth dynamics.
With total assets of TND 8.150 billion, Zitouna is three times larger than BAT (TND 2.657 billion) and four times larger than WIB (TND 2.046 billion).
Its Net Banking Income (NBI) of TND 451 million is almost three times that of BAT. In absolute terms, Zitouna dominates without question.
In relative terms, however, the story is very different. Founded in 2009 and fully owned by the private company Majda Tunisia, it occupies a middle position in terms of maturity, between BAT with its 42 years of history and WIB, which became a bank in 2015.
Funding and spread
Zitouna’s overall cost of remunerated liabilities stands at 3.53%, between BAT (2.35%) and WIB (5.06%). Its large volume of non-remunerated current accounts (TND 1.737 billion, or 24.8% of deposits) mechanically lowers this average cost.
However, its Tawfir savings products are remunerated at 4.28%, the same level as WIB, while its fixed-term Istithmar Mouajah investments cost 8.2%, close to WIB’s 9.79%. Regarding funding costs, BAT’s advantage (40 years of reputation and low-cost captive funding) remains structurally out of reach for the other two.
Zitouna’s net spread stands at 4.49% (asset yield of 8.02% minus funding cost of 3.53%), compared to 5.48% for BAT and 4.30% for WIB. Zitouna positions itself between the two, but never reaches BAT’s efficiency in what forms the core of Islamic banking.
Profitability: The giant’s paradox
Zitouna generates the highest net profit in absolute value (TND 54.6 million), ahead of BAT (TND 42.0 million) and WIB (TND 8.3 million). Yet its relative ratios are declining.
Its ROE (Return on Equity) is only 7.4%, compared to 13.2% for BAT and 4.9% for WIB. Its ROA (Return on Assets) reaches 0.67%, compared to 1.58% for BAT and 0.41% for WIB. A balance sheet five times larger than WIB’s only produces six times the profit. The reason is clear and identifiable: the sharp increase in the cost of risk in 2025.
Zitouna’s net profit fell by 26.5% in one year (from 74.2 million TND to TND 54.6 million), even though its NBI increased by 12.7%. Revenues are present, but provisions absorbed the performance. Its effective tax rate (40.8%) further worsens the picture, far from BAT’s 23.2%, which makes intensive use of tax-exempt reinvestment mechanisms.
Operational efficiency
Zitouna’s CIR (Cost-to-Income Ratio) stands at 55.0%, slightly above BAT (52.9%) but well below WIB (71.2%). Operating expenses remain under control: staff costs reached TND 155.9 million (+14%), while general expenses rose to TND 74.1 million (+1.5%). In this area, Zitouna belongs among the well-managed banks, although BAT still retains the lead.
Asset quality: The weak spot
This is where Zitouna falls behind its two peers. Its non-performing loan ratio reaches 12.3% of gross customer loans (TND 768 million classified out of TND 6.254 billion), compared to 5.9% for BAT and 6.6% for WIB.
This rate is more than double that of its peers. The composition is concerning: Class 4 impaired assets jumped by 81% in one year, from TND 332 million to TND 599 million. Total cost of risk stands at TND 111.4 million, up 49% year-on-year, representing 24.7% of NBI, compared to 10.9% for BAT and 16.5% for WIB.
Coverage of classified loans through individual and additional provisions, as well as reserved income, reaches 40.6%, slightly below WIB (45.9%) and far below BAT (79% including allocated deposits).
The total stock of provisions (TND 347 million at the end of 2025, +41% in one year) reflects a genuine catch-up effort, consistent with the implementation of the new Central Bank of Tunisia methodology 2025-01 on collective provisions.
This first-time application effect is, by nature, temporary, which raises hopes for a partial normalization of the cost of risk in the coming years. The real question is whether migration toward Class 4 assets will continue or stabilize.
Liquidity and financial strength
Zitouna’s Loan-to-Deposit Ratio (LTD) is the most comfortable among the three, at 83.3% (compared to 91.8% for BAT and 100.2% for WIB). Customer deposits grew by 10.8% in 2025.
Excess liquidity was massively redirected toward the interbank market through Moudharaba placements (TND 1.129 billion at end-2025 versus TND 13 million at end-2024), while ordinary holdings at the Central Bank dropped from TND 749 million to TND 199 million. This active treasury management generated TND 60 million in interbank operation income, up 46%.
Zitouna’s simplified solvency ratio (equity / total assets) stands at 9.0%, between BAT (12.0%) and WIB (8.3%). Its financial leverage of 11.1x remains reasonable but deserves monitoring: with 12.3% classified loans and 40.6% coverage, the uncovered residual risk represents approximately TND 456 million, or 62% of shareholders’ equity.
An unexpected differentiator: ESG
Zitouna is the first of the three banks to publish a formal sustainability report (IFRS S1 standard, initiated by the Financial Market Council), with TND 219 million already allocated to renewable energy financing and an operational Impact Investments Department. BAT and WIB have not yet published equivalent reporting.
While this positioning remains embryonic in terms of financial impact, it constitutes a real strategic advantage in a regulatory environment expected to become stricter.
Three-way verdict
BAT is the benchmark model. Its 13.2% ROE, 5.48% spread, and cost of risk equal to 10.9% of NBI represent the best performances among the group’s six fundamental indicators.
Forty-two years of accumulated experience are clearly reflected in every ratio. It is also the only bank regularly distributing dividends, with a payout ratio of 35% of net income in 2024.
Zitouna is the market leader whose profitability is temporarily depressed by an intense provisioning cycle. If the non-performing loan ratio stabilizes and the first-time effect of Circular 2025-01 fades, the sheer strength of its NBI (TND 451 million) should bring its ROE back to more competitive levels.
However, the concentration of ownership (Majda Tunisia holding 100%) limits external recapitalization options in the event of another shock.
WIB is the fast-expanding challenger whose current profitability (ROE 4.9%, CIR 71.2%) is deliberately sacrificed in favor of market share acquisition. Its pipeline of TND 377.5 million in undisbursed commitments and deposit growth of 24.6% outline a credible trajectory, but its high long-term funding cost (9.79%) remains its most threatening structural weakness.
In one sentence: BAT currently wins the efficiency battle, Zitouna has the means to win the profitability battle tomorrow if it controls its credit risk, and WIB is betting on growth whose viability depends on an urgent reduction in its funding costs.
