Online Reporter
Tawanda Musarurwa
CheckPoint Desk
AS the Reserve Bank of Zimbabwe continues to implore banks to cut charges, a system where fees fund profits and loans make up just 33 percent of assets faces an existential threat.
According to the 2025 Mid-Term Monetary Policy Statement (MPS), loans accounted for just 32,9 percent of total banking assets by mid-2025, even as the sector’s balance sheet expanded to ZiG191,8 billion.
Profits, meanwhile, halved over the year to about US$184 million.
Transaction charges have quietly become the financial system’s lifeblood, despite years of moral suasion from the RBZ urging banks to make charges more affordable. But this call is being directed at a sector already grappling with thin returns and limited room to absorb further pressure on margins.
RBZ data from the Mid-term MPS shows that average return on assets fell sharply, from 13,4 percent in June 2024 to 4,4 percent in June last year.
For years, local banks have survived by charging for money movement rather than taking on credit risk.
With credit growth still muted and pressure on fees intensifying, a harder question is emerging: will local banks survive if the RBZ shifts from moral suasion to policy?
That scenario is not far-fetched.
Over the past two years, the RBZ has introduced modest measures to ease bank charges, including zero maintenance and service fees for low-balance Zimbabwe Gold (ZiG) and foreign currency accounts, in April 2024, and the elimination of bank and point-of-sale charges on transactions below US$5 from February 2025.
This analysis examines the unaudited half-year 2025 financial results of CBZ Holdings, NMBZ Holdings and FBC Holdings, focusing on the share of income derived from fees and commissions.
Why fees matter so much to local banks
In his February 2025 MPS, RBZ governor Dr John Mushayavanhu highlighted the sector’s reliance on fees.
According to the statement, fees and commissions accounted for 22 percent of total banking sector income, while lending contributed only 13,46 percent.
In most countries, this balance is reversed, with banks earning most of their income from loans and fees playing a supporting role.
Locally, lending remains risky due to widespread informality and fears over exchange-rate volatility.
In contrast, fees are more predictable. This shift is reflected in banks’ financial statements. The country’s largest banking group, CBZ Holdings’ 2025 half-year unaudited results, show that fee and commission income remains a significant pillar of earnings.
While CBZ generated a broader pool of non-interest income from foreign exchange trading and other sources, fee and commission income alone amounted to roughly ZiG600 million for the half-year, accounting for about a quarter of operating income.
This underscores the continued importance of transaction-driven revenue, despite the group’s scale and diversification.
NMBZ Holdings reported ZiG623 million in fee and commission income for the six months to June 2025 — more than double its ZiG233 million in net interest income over the same period. The figures highlight a business model that is heavily tilted towards transactional activity, with fees now contributing the bulk of operating income rather than lending.
FBC Holdings also recorded a sharp rise in net fee and commission income during the half-year, driven largely by higher transaction volumes and growing digital banking usage.
Fee-based income accounted for a substantial share of operating revenue, reinforcing the group’s reliance on money movement rather than traditional balance-sheet lending.
What if fees are cut by half?
Using unaudited HY2025 results for CBZ Holdings, NMBZ Holdings and FBC Holdings, this analysis models a hypothetical 50 percent cut in fee and commission income, holding costs constant and making no assumptions about changes in lending volumes or interest margins.
The exercise is intended to illustrate the potential impact should moral suasion give way to direct regulation of bank charges.
The results suggest such a move would materially weaken profitability across the sector. At CBZ, halving fee income would remove close to ZiG300 million from operating revenue for the period under review, pushing up the cost-to-income ratio and sharply compressing profits even before accounting for impairments or taxation.
For NMBZ, a 50 percent cut would wipe out more than ZiG300 million in revenue, leaving little room to absorb operating costs without restructuring, scaling back services, or reducing investment in delivery channels.
At FBC, a similar fee reduction would strip away about ZiG930 million in operating revenue, equivalent to roughly a quarter of operating income.
Across the three banks, analysis of published financials indicates that a 50 percent cut in fees could erase between a quarter and a third of operating income; a gap that would be difficult to close in a system where lending contributes just 13,46 percent of total banking sector income, according to the Reserve Bank of Zimbabwe.
While most banks currently meet capital requirements, smaller institutions with thinner buffers would come under pressure.
Likely responses would include branch closures, staff reductions, higher minimum balances, or the introduction of new fees to replace lost income. Regional contrast emerges when compared to South Africa’s largest bank by total assets, Standard Bank Group.
Standard Bank’s HY2025 interim results point to a relatively balanced income mix, with net interest income of about R51 billion accounting for roughly 60 percent of total income, and net fee and commission revenue of around R17 billion contributing just over a fifth, alongside trading, insurance and other income streams.
Applying the same hypothetical stress test used for Zimbabwean banks, a 50 percent cut in fee income — equivalent to about R8,5 billion, or roughly 10 percent of total revenue — would materially compress earnings and weaken returns, but would not threaten viability.
The group’s large loan book and diversified earnings base would continue to anchor profitability.
By contrast, many local banks risk losing a quarter to a third of operating income from a similar fee cut, highlighting that for a regional lender like Standard Bank, the shock would be painful but manageable, whereas in Zimbabwe it would strike at the core of the banking model.
And by 25 percent?
In a scenario where bank charges are cut by 25 percent, the impact would amount to a significant but containable shock rather than a systemic threat. Based on the same half-year financials, such a move would erase an estimated 12 to 15 percent of operating income at CBZ Holdings, NMBZ Holdings and FBC Holdings, cutting CBZ’s non-interest income by about ZiG460 million and NMBZ by roughly ZiG150 million, narrowing profits, pushing up cost-to-income ratios and compressing dividend headroom.
Bankers Association of Zimbabwe (BAZ) president Dr Sibongile Moyo, however, says local banks are already undergoing a structural shift, moving away from reliance on volatile revaluation gains towards more stable, lending-driven income.
“Previously, macroeconomic instability meant that a large portion of banking income was derived from revaluation gains, which accounted for over 53 percent of total earnings in the first half of 2024, rather than core lending.
“With the recent stabilisation of the exchange rate, these volatile gains fell to zero in the first half of 2025, forcing a healthy pivot towards sustainable financial intermediation,” said Dr Moyo.
“This shift is evidenced by interest income from loans rising from 10,44 percent to 31,91 percent over the same period.
“The upward trend is expected to continue as the deposit base and access to offshore lines of credit in the market increase.”
Some customers have asked why banks do not simply lend more instead of charging high fees. The answer lies in risk.
With many local businesses operating outside formal structures, reliable credit histories are scarce and collateral values are volatile.
I think this analysis leaves the bit that has affected banking profitability. Retail banking has shrunk to very low levels due to high bank fees paid by depositors. Customers have shied away from banking because it makes no sense to put one’s money in the bank only to lose a chunk of it through bank charges. The understanding by the ordinary person is that putting money into the bank should be a money growth investment not erosion of the same money. Zimbabwe being an almost 80% informal based economy that does not utilise banking facilities due to high bank charges, it is clear that the onus is on banks to adapt to this fact and reduce banking charges to encourage the use of their facilities. A business cannot survive by punishing its customers which is what the banking industry is doing.