• ZB Financial Holdings' profit drops 35% to ZWG679m due to a ZWG740m reduction in exchange gains
• Non-performing loans jumped from ZWG138m to ZWG853m, indicating significant credit quality concerns
• Net interest income nearly tripled to ZWG1.202bn, and insurance services swung to a ZWG211m profit, showing underlying business strength

Harare- ZB Financial Holdings has reported profit after tax of ZWG679 million for the year ended 31 December 2025, against a restated ZWG1.042 billion in 2024, a 35% decline that frames these results as a decline. The entire decline and more traces to a single variable, exchange gains.

In 2024, when the ZWG depreciated aggressively from the beginning of the year and the official rate moved sharply, ZB generated ZWG1.22 billion in net exchange gains, a combination of realised foreign currency trading income and unrealised translation gains on USD-denominated assets. In 2025, with the official exchange rate depreciating by only 0.7% for the full year, that windfall collapsed. Net exchange gains declined to ZWG484 million, a fall of approximately ZWG740 million. That single line item was responsible for essentially the entire reported profit decline.

The CEO's own framing was honest about this: "The decline in profit was mainly as a result of reduction in Exchange gains due to the stabilisation of exchange rates." This is not euphemism, exchange gain dependency is structural in Zimbabwe's banking sector, and ZB was among the most exposed. When the monetary policy rate held at 35% all year and the exchange rate barely moved, the translation and trading gains that inflated prior year profits simply did not materialise.

The group acknowledged this candidly through its measure of "maintainable earnings",  profit excluding unrealised exchange gains and fair value adjustments. On this basis, the group moved from a loss of ZWG292 million in 2024 to a positive ZWG73 million in 2025. That is the real operational story, the core business, for the first time in the modern era, is generating sustainable earnings without relying on currency volatility as a crutch.

The most important positive aspect was the performance of ZB Bank's core lending operations. Net interest income grew from ZWG475 million to ZWG1.202 billion, a 153% increase that reflects both higher lending margins and a deliberate push into structured finance across agriculture and manufacturing value chains. Interest income from advances, overdrafts, and treasury bills rose sharply as the Bank repriced its asset portfolio to reflect the prevailing 35% policy rate environment.

The insurance service result swung dramatically from a ZWG7 million loss in 2024 to a ZWG211 million profit in 2025, driven by a 130% increase in insurance revenue from ZWG424 million to ZWG976 million. This performance, spread across ZB Life, ZB Reinsurance, and the Botswana operations, reflects both policy upgrades and new business acquisition. The Botswana reinsurance unit, P&C Reinsurance, delivered a 33% increase in profit after tax in USD terms, a standout performer in an otherwise mixed group picture.

Banking commissions and fees grew from ZWG1.158 billion to ZWG1.773 billion,  a 53% increase attributed to the new core banking system, which the group launched in 2025. Digital channel income, management fees, and service charges all contributed to the growth, validating the technology investment made over the prior two years.

The problem is that these genuine operational improvements, NII growth, insurance recovery, fee expansion  were collectively overwhelmed by the ZWG1.110 billion increase in operating costs, from ZWG1.813 billion to ZWG2.923 billion. A 61% cost increase in a year when exchange rate-adjusted revenue growth was considerably more modest is structurally unsustainable.

The cost drivers included staff rationalisation charges, 78 employees were disengaged under the Compulsory Disengagement Scheme during the year, plus occupation expenses that grew five-fold, reflecting the recognition of lease costs under the new core banking system implementation.

However, the most alarming single number in these results was the non-performing loan ratio.

Non-performing loans surged from ZWG138 million to ZWG853 million,  a 518% increase in one year, Against a gross loan book that itself shrank from ZWG4.15 billion to ZWG3.5 billion, NPLs rose from 3.3% to 24.3% of gross advances. Nearly one quarter of the bank's loan book is now classified as non-performing.

The group's own explanation was carefully worded: "The significant increase in the non-performing loan portfolio was primarily driven by updated credit risk assessments conducted by the Group during the reporting period, which resulted in additional exposures meeting the criteria for non-performing status under IFRS 9." This is a disclosure that the bank has restated its classification of existing loans as non-performing , not that ZWG715 million of new credit deteriorated in a single year, but that loans already on the book were reclassified following a more rigorous internal review.

The distinction matters for interpretation but not for outcome. Whether NPLs materialised from new deterioration or from recognition of existing impairment, the result is a credit quality profile that is materially weaker than 2024 disclosures suggested. The loan impairment charge more than doubled from ZWG104 million to ZWG256 million. The ECL allowance balance grew from ZWG163 million to ZWG415 million. Total credit exposure to Stage 3 loans, the most impaired,  reached ZWG871 million, representing 8.6% of total financial assets.

The sectoral analysis reveals where the pain is concentrated. Mining exposure fell from 14% to 8% of gross advances, suggesting either repayment or deterioration. Distribution fell from 17% to 5%. Corporate loans as a category appear to have been significantly downgraded. The loan commitment book collapsed from ZWG1.97 billion to ZWG598 million, a 70% reduction in undrawn facilities, implying a substantial tightening of credit availability.

The most consequential structural event was the liquidation of ZB Building Society. The RBZ cancelled ZB Building Society's licence following a resolution by ZB Financial Holdings to surrender it and proceed with voluntary liquidation. An assessment found the Building Society to be solvent with sufficient liquid assets to pay all creditors in full. Zimeye

ZB Building Society issued a 90-day notice to customers between May and August 2025, advising of planned account closures. Customers were given the option to transfer deposits to ZB Bank or another institution of their choice. Zimeye The Deposit Protection Corporation was subsequently appointed liquidator in March 2026. The group now operates with a single banking subsidiary, ZB Bank Limited.

The Building Society's closure ends a saga that stretched back years. The capital shortfall at the Building Society,  which had consistently failed to meet the RBZ's minimum capital requirement of USD20 million,  was never resolved. Attempts to merge the Bank and the Building Society repeatedly foundered over a shareholder dispute involving the original acquisition of what was then Intermarket Building Society. The dispute was never publicly resolved. The liquidation is, in practical terms, the group acknowledging that resolution was impossible and capital optimisation required eliminating the liability.

The financial impact on the consolidated group is modest in the near term. ZB Building Society contributed relatively little to group earnings, and its ZWG asset base was small relative to ZB Bank's ZWG11.8 billion. The impact on ZB Asset Management, a new entity licensed in August 2025 and opened to the public in November,  and on the group's ability to continue offering mortgage products through a regulated building society vehicle remains to be seen.

Therefore, ZB Financial Holdings enters 2026 a different institution from a year ago, and in several respects, a better one. The core banking operations are generating NII margins that do not depend on exchange rate volatility. The insurance cluster has recovered convincingly. The new core banking system is producing measurable fee income growth. The building society overhang has been definitively resolved. The group has been awarded Zimbabwe's first sustainability certification in banking, positioning it ahead of peers on a governance dimension that matters for external lines of credit.

But the balance sheet carries risks that the ZWG679 million profit figure does not adequately convey. A 24.3% NPL ratio, even partly a function of reclassification, is not a number that commands confidence in credit quality. Treasury bills overvalued by ZWG425 billion, pending validation of ZWG450 billion in trade receivables are not minor disclosures. 

The group's liquidity ratio of 82%, well above the 30% statutory minimum, and its capital adequacy position at ZB Bank, where the Tier 1 ratio stands at 22%, provide genuine buffers.