Online Reporter
Nelson Gahadza, Zimpapers Business Hub
AFC Holdings states that the first half of 2025, up to June 30, has largely been a rest period; hence, the focus for the remainder of the year is on growing the loan book and fee-based revenue, while maintaining cost control through operational efficiencies.
Additionally, the group is focusing on strengthening its insurance portfolio to generate steady underwriting profits.
“The first half has been a reset period for AFC Holdings Limited, being the baseline for USD performance. The groundwork laid in the first half of the year will position us to deliver sustainability and value for our clients, shareholders and the communities we serve,” said group chief executive Mr Francis Macheka in a statement of financials.
During the period under review, the group recorded a loss after tax of ZiG10,99 million from a profit of ZiG542,79 million in the same period last year, with the difference largely due to the removal of IAS 29 hyperinflation gains and unrealised foreign exchange gains that boosted 2024 results.
“When adjusting for these non-operational items, our underlying earnings profile is more stable year on year,” said Mr Macheka.
For the period under review, group net interest income was nine percent lower at ZWG117,71 million from ZWG129,93 million in 2024, driven by lower interest income on loans and advances despite reduced funding costs.
During the half-year period, fee and commission income remained steady, with a new grant income of ZWG24,48 million supporting the line.
“The grant funding was secured for smallholder farmer support, and the group continues to expand digital platforms to reach more rural clients and reduce transaction costs,” said Mr Macheka.
In terms of individual business performance, AFC Commercial Bank recorded a profit after tax of ZWG17,.1 million for the half-year period under review, compared to ZWG437 million in the prior period.
Mr Macheka said the significant decline in profitability is mainly attributable to the attendant distortions evident on the unrealised exchange gains line.
The bank’s net interest income closed the period at ZWG81,2 million, down from ZiG101,1 million in June 2024, as a result of a decline in the book.
However, fee and commission income remained resilient at ZWG347.2 million, driven mainly by transactional banking services.
Mr Macheka said the bank sustained its Tier 1 capital above the US$30 million minimum requirement, while the capital adequacy ratio of 48,45 percent was also above the 12 percent regulatory minimum.
“During the period, the bank continued with its thrust on digital transformation and customer service enhancements.
“The new IDC Core Banking System has enhanced efficiencies on the bank’s transaction channels, resulting in significant improvements in customer experience,” said Mr Macheka.
He added that the expanded ATM network has further promoted customer convenience, and the bank successfully pursued strategic funding initiatives to support loan book growth, although the impact on income will be more distinct in the second half of the year.
The AFC Land and Development Bank is forecast for a rebound as pipeline funding initiatives mature and revenue streams diversify.
Mr Macheka said in the first half of 2025, the development bank launched several new initiatives, including the Bridging Finance Facility, commodity trading and credit guarantees for farmers.
“These products enhance our agility and responsiveness to the evolving needs of Zimbabwe’s agricultural sector, and to date, the bank has supported 5 887 farmers, positively impacting 108 000 livelihoods, with women accounting for 34 percent and youth for five percent of beneficiaries,” he said.
He noted that in its fourth year of operations since its inception in 2021, AFC Land and Development Bank has continued to advance its mandate of providing sustainable agricultural financing despite a challenging operating environment.
He added that, established with limited capital, the bank has proactively sought funding from diverse sources, including agro bills, developmental partners, RBZ facilities, and structured arrangements with input suppliers.
“Going forward, the bank will focus on product diversification, cost management, and deepening partnerships with developmental partners to mitigate reliance on costly market funding, and the upcoming land monetisation initiative is expected to unlock significant balance sheet potential,” said Mr Macheka.
The group’s insurance unit, AFC Insurance Company, in the first half of the year demonstrated resilience and strategic agility in the face of a challenging macroeconomic environment, and the business recorded solid growth in its core agricultural portfolio, with winter crop coverage increasing to 14 280 hectares, more than double the prior year’s hectarage.
“This growth translated into a substantial increase in agricultural premiums, underscoring the effectiveness of our targeted market strategies,” said Mr Macheka.
He noted that the group’s general insurance segment also showed positive momentum, with the number of non-agriculture customers insured increasing, reflecting improved brand visibility and competitive product offerings.
“In line with our financial inclusion mandate, we insured 11, 767 marginalised farmers and generated US$1,07 million in premiums from inclusive insurance products, reinforcing our commitment to supporting underserved communities,” said Mr Macheka.
He said, looking ahead, AFC Insurance Company will focus on customer-centricity, refining products using client insights and will leverage technology to create fit-for-purpose insurance solutions.
AFC Leasing Company recorded other comprehensive income for the period of ZiG58,77 million; however, operational efficiency and profitability for the first half were negatively affected by liquidity constraints at the onset of the summer cropping harvesting period, which hampered timely machinery deployment, resulting in low equipment capacity utilisation and high maintenance costs and rising asset insurance.
Mr Macheka said in response, Management is implementing a comprehensive turnaround strategy focused on restoring profitability and improving operational capacity.
He said key initiatives include a facility of US$3 million availed by the shareholder, with about US$300 000 having been drawn down to support mechanisation projects and working capital.
Mr Macheka said the group remains adequately capitalised and above all regulatory minimums, and ongoing engagement with shareholders is underway to secure additional working capital injections to fund loan book growth and support agricultural value chain financing.
He said the group’s capital is anchored in land assets allocated by the Government of Zimbabwe, and the group is seized with land monetisation to turn the land into productive use.
“The group is also exploring blended finance arrangements with development partners to strengthen its capital base without excessive balance sheet strain,” said Mr Macheka.
