• Deposit growth is exposing differences in margins and credit quality as ZB’s corporate problem loans rise and CBZ’s watch-list credit more than doubles
• Sector NPLs fell to 3.19%, but bank-level credit quality diverged sharply
• ZB corporate problem loans doubled while CBZ Stage 2 exposure jumped 145%
• NMB and First Capital converted credit growth into earnings with stronger risk-adjusted outcomes

Harare- Banking-sector assets increased from ZWG208.93 billion in December 2025 to ZWG247.86 billion by June, while loans and advances climbed from ZWG75.59 billion to ZWG94.61 billion. Deposits expanded faster, from ZWG123.53 billion to ZWG158.29 billion. RBZ’s reported loans-to-deposits ratio, excluding lines of credit, consequently declined from 61.19% in December to 56.90% in June, showing that deposit mobilisation continued to outpace credit deployment across the system

RBZ simultaneously reports a sector non-performing loan ratio of 3.19% at June, down from 3.64% in March and 3.47% in December, comfortably inside the central bank’s 5% benchmark. It describes the banking system as well-capitalised, liquid and carrying satisfactory asset quality. 

The individual bank accounts complicate that aggregate picture. Some banks expanded credit while containing bad-loan ratios and generating stronger funded income. Others accumulated substantially greater credit risk even before the sector-wide NPL number moved materially. At ZB Bank, disclosed non-performing loans increased despite rapid loan-book expansion. At CBZ, Stage 2 credit more than doubled while Stage 3 exposure also increased. NMB retained a low group NPL ratio but absorbed sharply higher impairment charges as lending accelerated. FBC reduced Stage 3 exposure, although the improvement occurred alongside substantial write-offs.

H2 therefore starts with a more demanding measure of banking performance, how much return each institution generates after funding costs and credit losses are accounted for.

The policy environment is squeezing both sides of the spread RBZ reduced its policy rate from 35% to 30% in June and expects banks to bring lending rates down in line with the policy rate and their funding costs. Statutory reserves remain at 30% on demand and call deposits and 15% on savings and time deposits in both currencies.

The Targeted Finance Facility has also been repriced. Banks can access the facility at 15%, down from 20%, and on-lend to productive sectors at a maximum all-in rate of 25%. The envelope remains ZiG1.2 billion. RBZ acknowledges that utilisation had been slow when real borrowing costs were higher.

Banks therefore face narrowing room between what funding costs, what borrowers can afford and the credit loss that eventually emerges from lending. That makes H1's divergence in net interest income only one part of the story.

NMB converted aggressive credit deployment into earnings, although credit costs are rising

NMB Bank produced the strongest funded-income expansion among the standalone institutions reviewed. Deposits increased from ZWG3.69 billion to ZWG5.78 billion while standalone loans rose 41.3% to ZWG6.03 billion. Net interest income climbed 52.7% to ZWG376.2 million and PAT increased from ZWG82.2 million to ZWG212.1 million. 

Its 104.4% loan-to-deposit ratio is supported by additional borrowings, which reached ZWG3.32 billion. Credit costs, however, moved considerably faster than the loan book. NMB Bank's expected credit impairment charge increased from ZWG25.6 million to ZWG85.8 million, more than tripling.

At consolidated NMBZ level, the NPL ratio remained much lower at 2.69%, with loan-loss coverage of 148.7%.  The two measures need to be kept separate because the 2.69% NPL ratio belongs to NMBZ Holdings, which now includes EFC Zambia, while the earnings and ZWG6.03 billion loan figures above belong to NMB Bank.

NMB enters H2 with strong funded-income momentum, but the next test is the relationship between incremental interest income and incremental credit cost. If impairment charges continue rising faster than the underlying loan book, the apparent benefit of aggressive intermediation will begin narrowing.

First Capital combines earnings growth with an improving bad-loan ratio

First Capital produced a more moderate credit expansion with comparatively clean risk outcomes. Gross loans increased from US$132 million to US$168.6 million and deposits rose 24.3% to US$248.8 million. Net interest income increased 14.8%, net fee income grew 3.1% and PAT advanced 26%.

Non-performing loans increased in absolute terms from US$6.86 million to US$7.52 million, but the loan book grew considerably faster. The derived NPL ratio consequently fell from approximately 5.20% to 4.46%.

Credit-loss concentration also becomes visible in the detailed disclosure. Light and heavy industry accounted for US$3.10 million of NPLs, while trade and services contributed US$2.47 million. Together those two categories represented roughly three-quarters of the bank's problem-loan stock. Agriculture had no disclosed NPLs against a US$19.1 million portfolio at June.

Impairment losses fell from US$2.9 million to US$0.36 million. First Capital consequently combines credit growth, stronger funded income and a declining problem-loan ratio, although the concentration of defaults within industry and trade remains the principal portfolio marker to watch.

ZB's earnings problem now extends into corporate credit quality

ZB Bank remains the most difficult H1 result in the peer set. Net advances increased 45.4% from ZWG3.11 billion to ZWG4.52 billion, while deposits rose 33.9% to ZWG9.27 billion. Net interest income nevertheless collapsed 48.8% to ZWG203.8 million as interest income fell and funding costs increased.

Credit quality adds another dimension. ZB disclosed ZWG907.3 million of non-performing loans and advances at June, up from ZWG852.5 million in December. Against gross advances of ZWG5.08 billion, the June number equates to about 17.9%.  The comparable December ratio was above 23%, so the percentage improved principally because the loan book expanded faster than the problem-loan stock. The actual stock of NPLs increased by around 6%. 

The internal credit-rating schedule identifies where the risk has migrated. Corporate non-performing exposure increased from ZWG366.9 million to ZWG806.2 million, more than doubling in six months. Small-business problem loans fell from ZWG251.8 million to ZWG18.6 million, consumer NPLs declined from ZWG168 million to ZWG66.6 million and mortgage NPLs fell to ZWG15.9 million.

ZB's credit problem has therefore become increasingly concentrated in the corporate portfolio. There is also a provisioning issue worth watching. The bank recorded a ZWG23 million impairment reversal on loans and overdrafts during H1, while its disclosed NPL stock increased. ZB reports security worth ZWG614.2 million against non-performing debt, so collateral recovery assumptions are important to the eventual loss outcome. 

This changes the interpretation of ZB's H1 performance. Recovering net interest margins is only part of the H2 task. Management also has to demonstrate recoverability within a corporate problem-loan book that expanded substantially during the period.

POSB has weak earnings conversion but retains one of the cleaner headline loan books

POSB moved in the opposite direction. Deposits increased almost 37%, but lending rose more slowly and substantial liquidity remained in money-market and interbank assets. Net interest income declined 2.7%, fee income fell 15.1% and PAT contracted 42.1%.

Asset quality provides some offset to that weak earnings conversion. POSB reported an NPL ratio of 2.09%, comfortably below the 5% regulatory threshold, while liquidity stood at 72% and capital adequacy at 36.56%.

There is, however, a second risk measure worth monitoring. Under IFRS 9 staging, gross credit-impaired loan exposure increased from approximately ZWG23.3 million at December to ZWG40.4 million at June. This measure is conceptually different from the regulatory NPL ratio and should not be treated as interchangeable with the 2.09% figure. It nevertheless shows that part of the portfolio requiring lifetime credit-loss assessment has increased.

POSB therefore enters H2 with substantial liquidity and a comparatively clean headline loan book. Its weakness sits in earning enough from that balance sheet.

CBZ's low lending intensity now comes with rising watch-list credit

CBZ Bank still has the largest apparent lending headroom. Deposits reached ZWG32.33 billion against ZWG11.01 billion of net customer loans, leaving the loan-to-deposit ratio near 34%. Net interest income was almost flat, net fee income fell 7.7%, and PAT declined 24.2%.

Yet its credit-risk migration is considerably more important than the low loan-to-deposit ratio alone. Stage 3 exposure increased from ZWG479.9 million to ZWG589.3 million, taking Stage 3 loans from roughly 4.9% to 5.1% of gross credit.

Stage 2 is the larger early-warning movement. Exposure rose from ZWG311.9 million to ZWG763.2 million, an increase of approximately 145%. Stage 2 and Stage 3 together now account for about ZWG1.35 billion, close to 12% of gross loans.

The ECL allowance rose from ZWG367.4 million to ZWG553.4 million, while the income statement moved from an impairment reversal in H1 2025 to a ZWG187.3 million credit-loss charge in H1 2026.

At consolidated CBZ Holdings level, the group also disclosed a recalibration of its expected-credit-loss model during the period, reducing the loss-given-default floor from 25% to between 5% and 10% while increasing certain collateral haircuts. Management said the changes were intended to better align the model with the evolving risk profile of the group’s financial assets. Because this disclosure is made at group level, the results do not provide enough information to isolate how much of standalone CBZ Bank’s ZWG553.4 million ECL allowance was affected by the model recalibration rather than movements in the underlying credit portfolio.

That leaves CBZ with an unusual H2 position, a very large pool of deposits available for deployment at the same time that the existing book is showing substantially greater Stage 2 migration. Faster credit growth therefore needs to be assessed against underwriting quality rather than the available liquidity alone.

FBC's improving NPL ratio came alongside a large clean-up of the book

FBC Holdings remains a consolidated comparison rather than a standalone bank comparison. Group net interest income increased 6.8%, net fees rose 12.4% and deposits grew to ZWG15.56 billion, while net loans increased to ZWG11.96 billion. Operating costs, however, rose 34.1%, leaving operating profit down 16.6%.

Credit quality improved at headline level, with FBC Holdings’ disclosed NPL ratio declining from 4.23% to 3.03%. Stage 3/default exposure also fell from ZWG456.4 million to ZWG311.3 million while the overall loan book expanded.The movement is less straightforward beneath the headline ratio.

FBC recorded ZWG215.9 million of write-offs during the period, while Stage 2 exposure increased from ZWG1.62 billion to ZWG2.25 billion, an increase of about 39%. The group has therefore reduced the stock of loans already classified in default while carrying a substantially larger pool under heightened monitoring. H2 recoveries, new Stage 3 migration and fresh defaults will provide a better measure of whether the reported asset-quality improvement is being sustained.

RBZ’s 3.19% system NPL ratio provides a useful measure of overall banking-sector stability, but individual disclosures show substantially different credit positions beneath the aggregate number. POSB reports an NPL ratio of 2.09%, NMBZ Holdings 2.69% and FBC Holdings 3.03%. First Capital’s disclosed NPL balances produce a derived ratio of approximately 4.46%, while standalone CBZ Bank’s Stage 3 exposure represents about 5.1% of its gross loan book. ZB Bank sits materially above the rest of the reviewed institutions, with its disclosed ZWG907.3 million of non-performing loans equivalent to approximately 17.9% of gross advances. ZB’s explicit non-performing debt balance rose from ZWG852.5 million at December despite the improvement in the derived percentage as its loan book expanded.

These measures are directionally comparable rather than accounting-identical. POSB, NMBZ and FBC disclose headline NPL ratios,  NMBZ and FBC figures are consolidated group measures, First Capital and ZB ratios are derived from disclosed problem-loan balances; and CBZ’s 5.1% measure is its standalone Stage 3 share rather than a separately disclosed regulatory NPL ratio. The dispersion should therefore be read as evidence of different credit-risk positions rather than as a perfectly standardised league table.

What policy cannot determine is the quality of each new loan originated at the lower lending rates. The TFF rate reduction gives banks cheaper funding for productive credit. That should improve borrower affordability and the economics of selected lending. It also means H2 credit expansion needs to be measured against subsequent Stage 2 migration, Stage 3 defaults and realised credit losses. A bank growing loans at 30% while credit risk deteriorates rapidly is producing a very different balance sheet from one growing at the same rate while NPL ratios and impairment costs remain controlled.

H2 moves from balance-sheet growth to risk-adjusted productivity. The H1 numbers therefore produce a sharper hierarchy than headline profits alone. NMB has generated the strongest funded-income expansion, although higher credit charges need watching as its rapidly expanded loan book seasons. First Capital has combined credit growth with higher recurring earnings, lower impairment expense and a declining NPL ratio.

POSB retains strong capital, liquidity and comparatively clean headline credit quality, but has struggled to earn enough from its growing deposit base. FBC has improved reported asset quality and grown core revenue, while high costs and substantial write-offs complicate the picture.

CBZ has enormous unused intermediation capacity, yet the rapid increase in Stage 2 exposure raises the underwriting hurdle for additional lending. ZB faces the most difficult combination: a rapidly expanded loan book, collapsing net interest income and a large corporate problem-loan portfolio.

That changes the meaning of the earnings divide identified across Zimbabwe's banks. The strongest H2 institutions will not simply be those that grow deposits or loans fastest. They will be those that can price funding correctly, deploy it into earning assets and retain the resulting income after the credit cycle has taken its share.

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