• RBZ wants cheaper productive credit, but H1 loan books show sharply different sector bets and an uneven risk profile beneath the system’s 3.19% NPL ratio
• Distribution, mining and agriculture attracted new credit, although banks chose very different exposures
• ZB’s corporate problem loans doubled while CBZ’s Stage 2 book rose sharply
• Cheaper RBZ funding makes H2 a test of productive lending and underwriting quality

Harare- Zimbabwe’s banks are entering H2 2026 with more deposits available for lending, but their interim results show that the allocation of that liquidity is becoming increasingly selective, and that the risk attached to the new credit differs materially across institutions.

Banking-sector loans and advances increased from ZWG75.59 billion in December 2025 to ZWG94.61 billion in June, while deposits expanded faster from ZWG123.53 billion to ZWG158.29 billion. The system loan-to-deposit ratio consequently eased from 61.19% to 59.56%. At the same time, the Reserve Bank of Zimbabwe reported an aggregate non-performing loan ratio of only 3.19%, down from 3.47% at December.

That aggregate stability hides a much wider bank-level credit story. CBZ is directing a larger share of its book into distribution and mining while reducing agriculture. ZB has rapidly expanded private and agricultural lending. POSB remains predominantly exposed to individuals and mortgages. First Capital is shifting incremental credit towards trade and industry. FBC Holdings has materially increased agriculture and manufacturing exposure, while NMB Bank identifies mining and agriculture as core corporate lending areas.

The important distinction is no longer simply where credit is growing, but whether those sectors are producing sufficiently strong returns after defaults, provisions and funding costs are absorbed.

That question becomes more important after RBZ said the gap between its policy rate and prevailing bank lending rates had become wide enough to price productive sectors out of formal credit. The central bank reduced its policy rate from 35% to 30% and has cut the Targeted Finance Facility rate to banks from 20% to 15%, with productive-sector lending capped at an all-in rate of 25%.

H2 therefore tests two things simultaneously, whether banks direct more funding towards productive activity, and whether they can do so without weakening asset quality.

CBZ is directing credit towards distribution and mining, but watch-list loans are rising

CBZ Bank has the largest deposit base relative to customer lending among the institutions reviewed. Customer deposits stood at ZWG32.33 billion at June, against gross loans of ZWG12.87 billion and net advances of ZWG11.87 billion. That puts net loans at about 36.7% of deposits, leaving considerable balance-sheet capacity outside customer credit.

The allocation of the existing book changed materially during H1. Distribution lending increased 49% from ZWG2.56 billion to ZWG3.83 billion, raising its share of gross loans from 23% to 30%. Mining rose 60% from ZWG647 million to ZWG1.04 billion, while private-sector lending increased 20% to ZWG3.12 billion. Agriculture moved sharply in the opposite direction, falling 28% from ZWG3.21 billion to ZWG2.31 billion and reducing its portfolio share from 29% to 18%. Manufacturing was broadly stable at ZWG885 million.

The allocation shows CBZ putting a greater proportion of its credit behind distribution and mining while reducing its exposure to agriculture. Distribution offers comparatively shorter working-capital cycles, while mining borrowers can benefit from foreign-currency export earnings that provide closer matching against USD funding. Agriculture remains exposed to production cycles, commodity prices, weather and repayment timing, although the published accounts do not establish that these considerations caused CBZ's reduction.

The credit-risk data complicate the deployment story. In CBZ's separate credit-quality schedule, Stage 2 exposures increased from ZWG311.9 million to ZWG763.2 million, while Stage 3 rose from ZWG479.9 million to ZWG589.3 million. Those balances belong to a narrower credit-risk exposure schedule and should therefore not be mechanically reconciled to the ZWG12.87 billion gross loan-book total. They nevertheless show materially greater migration into higher-risk categories during H1.

CBZ therefore enters H2 with substantial capacity to extend additional credit while the existing book is carrying a larger watch-list population. Faster productive-sector lending will need to be judged alongside subsequent Stage 2 migration, defaults and credit losses rather than deployment volumes alone.

ZB expanded agriculture and private lending while corporate credit became its biggest risk

ZB Bank took a more aggressive approach to credit expansion. Gross advances increased from ZWG3.67 billion to ZWG5.08 billion. Private-sector lending almost doubled to ZWG1.70 billion, while agriculture increased from ZWG156 million to ZWG440 million. Manufacturing rose to ZWG347 million, construction more than tripled and transport almost doubled.

Mining declined from ZWG278 million to ZWG233 million, while services fell to ZWG722 million. The divergence from CBZ is striking. CBZ materially reduced agriculture while ZB almost tripled it during the same period. That difference points towards bank-specific assessments of borrowers, collateral, pricing and sector risk.

ZB's credit-quality disclosure raises a much larger issue. Non-performing loans increased from ZWG852.5 million to ZWG907.3 million. Because gross advances expanded rapidly, the derived NPL ratio fell from approximately 23% to about 18%, but the actual stock of bad loans increased.

The problem is concentrated overwhelmingly in corporate lending. Corporate non-performing exposure rose from ZWG366.9 million to ZWG806.2 million, more than doubling. By contrast, small-business, consumer and mortgage NPLs all declined materially.

ZB does not disclose those corporate NPLs by economic sector, so they cannot be assigned specifically to agriculture, manufacturing or another industry.

The analytical conclusion is nevertheless clear. ZB is increasing productive and private-sector credit at the same time that corporate underwriting has become the most important asset-quality weakness on its balance sheet.

That makes its H2 hurdle higher than credit growth. The newer loans must generate adequate spreads while management works through a corporate problem-loan stock already approaching ZWG1 billion.

POSB is deploying incremental credit mainly towards households

POSB remains structurally different. Individual loans rose around 43% to ZWG855 million and mortgages increased about 38% to ZWG310 million. Those two categories account for almost four-fifths of its disclosed customer loan portfolio.

Corporate lending was essentially unchanged, while SME and agribusiness lending declined and microfinance exposure contracted. POSB simultaneously accumulated large liquidity positions as deposit growth outran loan growth. Money-market assets climbed to approximately ZWG963 million, including substantial interbank placements.

This means a large part of the bank's incremental balance-sheet expansion has gone into household credit and liquid financial assets, rather than an equivalent increase in corporate and SME lending.

Asset quality remains comparatively strong at headline level. POSB reported an NPL ratio of 2.09%, comfortably below the 5% regulatory threshold. Beneath that regulatory measure, IFRS 9 credit-impaired gross exposure increased from ZWG27.1 million in December to ZWG40.4 million in June, while lifetime-ECL exposure that was not yet credit impaired rose from ZWG33.3 million to ZWG51.2 million. The regulatory NPL ratio and IFRS credit-impaired classifications are different measures, but the movement gives an H2 marker as POSB continues expanding individual and mortgage lending.

Trade is attracting more credit, but First Capital shows it is not automatically low risk

First Capital offers perhaps the clearest example of why sector allocation should be examined together with bad loans. Physical-person lending increased from US$72.7 million to US$80.2 million, but its share of the portfolio fell from 55% to 47%.

Trade and services surged from US$16.6 million to US$40.2 million, lifting its share from 13% to 24%. Light and heavy industry increased to US$20.2 million, while agriculture stood at US$19.1 million.

The marginal dollar is therefore moving towards business rather than households. Yet the bad-loan breakdown shows where risk is concentrated. Light and heavy industry carried US$3.10 million of NPLs against US$20.24 million of loans, giving a sector NPL ratio of roughly 15%. Trade and services carried US$2.47 million in NPLs against US$40.17 million, or about 6%.

Physical persons, despite accounting for almost half the portfolio, had US$1.96 million of NPLs against US$80.18 million of loans roughly 2.4%. Agriculture reported no NPLs. That changes how First Capital's business-credit expansion should be interpreted.

First Capital is therefore reducing the relative dominance of household lending while directing a larger share of incremental credit towards trade, services and industry. The aggregate NPL ratio improved to about 4.5% as the overall loan book expanded faster than problem loans, although risk is unevenly distributed. Light and heavy industry carried US$3.10 million of NPLs against US$20.24 million of loans, while trade and services carried US$2.47 million against US$40.17 million. Physical persons, despite remaining almost half of the portfolio, carried US$1.96 million of NPLs against US$80.18 million of exposure. The expansion into business lending therefore comes with a clear H2 test around industrial and trade-sector recoveries.

FBC is making the clearest rotation towards agriculture and manufacturing

FBC Holdings' consolidated credit book shows one of the strongest shifts towards productive sectors. Agriculture increased from ZWG1.09 billion to ZWG1.95 billion, raising its share from 10% to 16%. Manufacturing climbed to ZWG1.98 billion and also accounted for 16% of the portfolio. Mining increased to ZWG558 million.

Individuals fell from ZWG2.61 billion to ZWG2.05 billion, reducing their share from 23% to 17%. Other services remained the largest exposure at 28%. This is one of the clearer examples of an institution reallocating away from household lending towards sectors associated more directly with production.

The headline credit-quality position improved, with Stage 3/default exposure falling from ZWG456.4 million to ZWG311.3 million while gross loans increased to ZWG12.32 billion. The movement should, however, be read alongside ZWG215.9 million of write-offs during the period.

There is also movement further up the risk curve. Stage 2 exposure increased from ZWG1.62 billion to ZWG2.25 billion, or about 39%, even as Stage 3 declined. FBC has therefore reduced the stock of loans already in default while carrying a larger pool under standard and special monitoring. H2 will show whether the strong expansion into agriculture and manufacturing continues without those watch-list exposures migrating further towards default.

NMB is pursuing mining and agriculture through a more credit-intensive funding model

NMB Bank remains the most credit-intensive standalone institution in the peer set, with loans of ZWG6.03 billion exceeding customer deposits of ZWG5.78 billion at June, while borrowings rose to ZWG3.32 billion to support further asset creation. Management identified mining and agriculture as the principal drivers of corporate lending growth and says longer-term USD lending is being funded predominantly through offshore credit lines.  

At NMBZ Holdings level, where the detailed sector allocation also includes EFC Zambia, loans rose to ZWG6.81 billion. Services and other recorded the largest absolute increase, rising ZWG828 million to ZWG1.48 billion. Individual lending increased ZWG427 million to ZWG1.76 billion, distribution rose ZWG424 million to ZWG580 million, mining added ZWG423 million to reach ZWG1.18 billion and agriculture increased ZWG405 million to ZWG1.24 billion, while manufacturing declined to ZWG327 million.

The consolidated portfolio became less household-concentrated as services and distribution gained share, while mining and agriculture expanded materially in absolute terms. The exact sector movements cannot all be attributed to standalone NMB Bank because EFC Zambia entered the group consolidation during the period. For NMB Bank itself, management identifies mining and agriculture as the main drivers of corporate lending growth and says offshore credit lines are supporting longer-term USD asset creation. The H2 test is whether that credit expansion continues producing stronger funded income without a corresponding increase in impairment pressure.

FBC increased agricultural lending by almost 79%. ZB nearly tripled its exposure. NMB identifies agriculture as a core lending area. CBZ, by contrast, reduced its agricultural book from more than ZWG2 billion to around ZWG1.19 billion, while POSB's combined SME and agribusiness category declined.

These institutions are operating under the same macroeconomic environment and agricultural outlook. RBZ expects agriculture and mining to be the principal contributors to Zimbabwe's projected 5% economic growth in 2026.

The different allocations therefore tell us more about banking strategy than the macro outlook itself. Agriculture can generate attractive financing opportunities following a strong production season, but climate, commodity, collateral and repayment timing remain material considerations. RBZ's own outlook identifies prospective adverse weather conditions among the risks confronting the economy.

That makes FBC and ZB's rapid agriculture expansion particularly important to watch through the next repayment cycle.

Trade is easier to finance but First Capital shows it is not automatically low risk

Trade and distribution emerge as another major destination for incremental banking credit. CBZ increased distribution lending by more than ZWG1.2 billion. First Capital more than doubled trade and services exposure. NMBZ's consolidated distribution portfolio also increased significantly.

Commercial logic supports that direction. Trade finance generally has shorter cash cycles than fixed industrial investment, giving banks faster repayment and repricing opportunities. Yet First Capital's sectoral NPL disclosure shows that trade and services already carry a problem-loan ratio above 6%.

Short duration therefore does not eliminate credit risk. Banks still need to distinguish between businesses generating recurring cash flows and those whose turnover growth is supported by fragile working-capital structures.

Mining has a funding advantage that other productive sectors do not

Mining is attracting additional credit at CBZ, FBC and NMB. Its structural advantage lies partly in currency matching. Zimbabwe's mining industry generates substantial foreign-currency receipts, allowing banks with USD deposits and offshore credit lines to finance borrowers whose revenues are also USD-linked. RBZ reported H1 foreign-currency receipts of US$10.72 billion, with higher exports among the main contributors, and expects strong gold and PGM prices to support mining growth.

That can make mining more attractive than productive borrowers whose revenues are largely domestic and whose financing costs remain USD-linked.

The Mid-Term MPS adds another pressure. RBZ notes that global benchmark rates such as SOFR have declined materially and wants domestic USD lending rates to follow the lower cost of funds. This should improve the economics of well-structured mining facilities, while also reducing the margin available to banks on new USD lending.

RBZ has now made H2 an underwriting test

The policy intervention changes the H2 lending equation. RBZ reduced the Targeted Finance Facility rate charged to banks from 20% to 15%, while lending under the facility to productive sectors is capped at a maximum all-in rate of 25%. The TFF envelope remains ZiG1.2 billion, and RBZ says previous uptake was constrained by high real borrowing costs. If financing cost has been a major constraint, the lower rate should support greater lending to qualifying agriculture, mining, manufacturing and other productive borrowers. The bank results show why that outcome must still be assessed against underwriting quality, subsequent Stage 2 migration and realised credit losses.

ZB demonstrates that rapidly expanding loans can coexist with severe corporate NPL concentration. CBZ shows how Stage 2 exposures can rise before defaults enter the headline NPL ratio. First Capital demonstrates that a portfolio can successfully rotate towards business lending while default risk becomes concentrated in specific sectors. FBC shows that improving NPL ratios can occur alongside substantial write-offs.

RBZ's aggregate 3.19% NPL ratio therefore provides comfort about system stability, but it is a poor substitute for analysing where each institution is adding risk. The stronger measure of H2 intermediation will be whether banks can direct cheaper funding into productive sectors without creating the next generation of problem loans.

Zimbabwe's banks already have the deposits. Policy is reducing part of the cost barrier. The remaining contest is increasingly about allocation and underwriting, which sectors receive the funding, which borrowers within those sectors qualify, and how much of today's credit growth remains performing after the repayment cycle begins.

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