Banks take divergent paths in half-year performance

Nelson Gahadza

ZIMBABWE’S banks are taking increasingly divergent paths, with lending growth, transaction income and balance-sheet deployment emerging as key differentiators in the first half of 2026.

A review of selected banks — the People’s Own Savings Bank (POSB), CBZ Holdings, FBC Holdings, First Capital Bank and TN CyberTech Bank — shows that despite operating in broadly similar conditions, their approaches to generating income and deploying deposits vary significantly.

The performances point to a banking sector in transition, with some institutions pushing deeper into conventional financial intermediation, while others are relying more heavily on transaction fees, digital platforms and alternative investments.

Investment analyst Mr Enock Rukarwa said the differing business models should not be assessed simply by looking at loan-to-deposit ratios, arguing that a low ratio does not necessarily indicate inefficient deployment of deposits.

He said banks have to maintain substantial liquidity because deposits in Zimbabwe remain largely transitory rather than sticky.

“Most of these deposits are transitory and they are not sticky to the extent that banks can choose to maintain certain levels of liquidity that ensure effective continuity,” he said.

“This helps explain why some banks are maintaining large liquidity buffers rather than immediately converting deposits into loans.”

The investment analyst identified uncertainty surrounding the country’s eventual de-dollarisation as a factor influencing lending decisions, particularly for longer-tenor facilities.

While the Reserve Bank of Zimbabwe has provided greater clarity around 2030, with conditions precedent attached, banks remain cautious about extending facilities beyond that period.

“We have started to see a handful of banks that are issuing mortgages with tenures as long as 10 years, to some extent even 15 years, but obviously there is still some semblance of uncertainty around the de-dollarisation date,” Mr Rukarwa said.

That caution is evident across the sector, although he said the growth in top-line income remains encouraging.

“What is encouraging is that the top-line has been growing at levels that are desirable and levels that are above even the average GDP (gross domestic product) growth,” said Mr Rukarwa.

“The grey area remains on the escalating operating cost.”

Mr Rukarwa expects most banks to remain profitable in 2026, but said deposit growth, utilisation of loans and advances, operating costs and asset quality would require close monitoring.

He warned of pressure on non-performing loans (NPLs) as borrowing costs remain relatively high in a United States dollar (USD) environment.

“Given the USD environment, you will realise that NPLs tend to also have upward pressure, given that this is a real currency and the cost of borrowing is relatively high,” he said.

According to Mr Rukarwa, the banking sector’s NPL ratio, which had at one point been below 2 percent, was now just above 3 percent.

“It is an area that we need to continuously monitor with a view to assessing and also coming up with corrective measures that ensure that depositors’ funds are protected,” he said.

CBZ remains one of the country’s largest financial institutions, with its strategy increasingly extending beyond conventional banking into structured finance and infrastructure funding.

The group is targeting a 15 percent return on equity and 15 percent asset growth, while seeking to increase deposits from about US$1,1 billion at the end of last year to at least US$1,5 billion by year-end.

It is also pursuing about US$150 million in new lines of credit to create additional lending and balance-sheet capacity.

More significantly, CBZ plans to raise and list a US$600 million bond programme on the Victoria Falls Stock Exchange, with US$75 million already secured under the initial US$100 million tranche.

CBZ group chief executive officer Mr Lawrence Nyazema said the bank wanted to bring international and regional capital into Zimbabwe’s infrastructure financing space.

“The reason for that is we intend to attract international and regional funds to come into the bond,” he said. “We are not stopping at US$600 million.

“We want to play a very active role in the infrastructure and projects that are required in this country.”

FBC Holdings presents a more mixed picture. The group recorded a 17,2 percent increase in total net income to US$80,2 million in the six months to June, from US$68,5 million in the previous corresponding period.

Profit before tax rose by 23,8 percent to US$17,5 million from US$14,1 million, pointing to stronger operating momentum.

However, profit after tax plunged 64,1 percent to US$12,8 million from US$33,9 million, while earnings per share fell from US5,56 cents to US2,10 cents.

Operating expenses increased by 34,1 percent to US$58,1 million from US$43,3 million, pushing the cost-to-income ratio to 78 percent from 69 percent.

FBC chief executive officer Mr Trynos Kufazvinei said the group made progress in client acquisition, recoveries and transactional activity, particularly among corporate, institutional and high-value clients.

“FBC Holdings continues to strengthen its financial performance, executing its mandate to serve corporate, institutional and high-value clients,” he said.

First Capital Bank provides a stronger example of revenue growth translating into earnings.

According to IH Securities, total net income increased by 6,7 percent year-on-year to US$43,68 million in the first half, supported by a 14,8 percent increase in net interest income to US$21,71 million.

Net non-interest income was broadly stable at US$21,98 million, with fee income rising by 10,8 percent to US$19,07 million, driven by higher card transaction and account maintenance fees.

This was partly offset by a doubling of card expenses to US$2,71 million.

Operating expenses rose by a contained 4,6 percent to US$20,75 million, leaving the cost-to-income ratio at about 47,5 percent.

Profit after tax consequently increased by 26 percent to US$16,73 million from US$13,27 million.

The loan book expanded by 28,2 percent to US$164,99 million, while customer deposits grew by 24,3 percent to US$248,76 million, producing a loan-to-deposit ratio of 66,3 percent.

IH Securities said the results confirm a deposit-led growth story, with meaningful headroom to expand lending into mining, agriculture and manufacturing.

The research firm said stable macroeconomic conditions should support asset quality and transaction volumes, while an expanding ecosystem of financial solutions and international-market initiatives could broaden the client base and support further net interest income growth.

First Capital Bank remained strongly capitalised, with capital adequacy of 27 percent and liquidity of 61 percent providing room to expand lending prudently.

POSB’s first-half performance was more defensive.

Net profit declined by 42 percent to ZiG108,48 million from ZiG187,42 million, while net operating income fell by 9 percent to ZiG659,47 million.

The decline was largely attributed to pressure on non-funded income following regulatory and monetary policy changes.

Operating expenses, however, increased by only 3 percent to ZiG550,99 million, indicating relatively tight cost control.

The bank’s balance-sheet indicators remained strong, as its non-performing loan ratio was 2,09 percent, below the 5 percent regulatory ceiling.

Liquidity stood at 72 percent against a 30 percent minimum, while capital adequacy was 36,56 percent, compared with a 12 percent regulatory minimum.

POSB board chairperson Mr Kenias Mafukidze said the bank would continue expanding access to financial services, strengthening digital banking and supporting productive sectors.

“POSB remains confident that the bank is well-positioned to deliver a resilient performance in the second half of 2026,” he said.

TN CyberTech Bank offers perhaps the clearest example of an alternative banking model.

At the end of June, customer deposits stood at ZiG5,07 billion against gross loans of ZiG928,8 million, producing a loan-to-deposit ratio of only 18,3 percent.

Its liquidity ratio was 89 percent, while capital adequacy stood at 41 percent.

Net interest income was ZiG92,1 million, compared with non-interest income of ZiG516,7 million.

Administration fees contributed ZiG146,7 million, transaction processing fees ZiG120,2 million, dealing income ZiG158,8 million and commissions ZiG37,9 million.

TN is consequently operating increasingly as a transaction and services-led financial institution rather than a conventional lender.

During the half year, the bank disbursed more than 725 000 small-value loans worth about US$7,9 million to more than 50 000 individuals, demonstrating significant digital distribution capacity.

The bank’s non-performing loan ratio remained low at 1,5 percent, although it increased from 0,5 percent in December.

Economist Mr Walter Mapfumo said TN’s model illustrates the changing nature of banking, where institutions could generate substantial revenue from customer ecosystems without relying exclusively on traditional lending.

“Digital and transaction-led banking can create significant scale, but the critical measure remains how effectively that scale is converted into sustainable earnings and returns on capital,” Mr Mapfumo said.