• Net interest income doubled to US$17.1 million as loans expanded 60%
• Underlying PAT rose to US$8.9 million after removing the US$3.8 million acquisition gain
• EFC Zambia contributed US$5.8 million in operating income during the half year

Harare- NMBZ Holdings has doubled net interest income during the first half of 2026 while its newly acquired Zambian business began contributing materially to group earnings, giving the financial services group a larger recurring income base even after stripping out a US$3.8 million acquisition-related gain.

According to the latest half year financial results, the group reported profit after tax of US$12.7 million, up from US$1 million in the comparable period, but roughly 30% of the current-period result came from a non-recurring bargain purchase gain recognised when the group acquired EFC Zambia. Excluding that gain, management calculated underlying PAT at US$8.9 million, still almost nine times the prior-period result.

The distinction matters because NMBZ's first-half performance contains two separate developments. The group is producing substantially stronger recurring banking earnings, while the EFC Zambia transaction has simultaneously increased assets, income and reported profit.

The underlying improvement is strongest in funded income. Net interest income increased 100% to US$17.1 million from US$8.5 million, while fee and commission income rose 20% to US$23 million. Operating income consequently increased 53% to US$48.6 million, against only a 6% increase in operating expenses to US$29.8 million.

That operating leverage materially changed NMBZ's income composition. After excluding the EFC acquisition gain, net interest income accounted for 38% of operating income compared with 27% a year earlier. Fee and commission income remained the largest component at 51%, although its share fell from 61% because funded income grew considerably faster.

The change is important for earnings quality. NMBZ has historically carried a sizeable transaction and fee component, while the first half shows greater earnings extraction from the balance sheet itself. The group is now earning considerably more from extending credit while retaining the fee franchise that previously carried a larger share of operating income.

That improvement accompanied aggressive balance-sheet expansion. Total assets increased 40% from US$340.6 million in December to US$477 million, while loans and advances rose 60% to US$248.2 million. Deposits increased 58% to US$223 million and offshore borrowings rose 46% to US$141.1 million. Shareholders' funds expanded 13% to US$95.2 million.

The funding structure therefore deserves as much attention as the loan growth.  At June, group loans were equivalent to approximately 111% of deposits, meaning deposits alone do not fund the credit book. Offshore facilities remain an important part of NMBZ's growth model, and total borrowings increased to ZWG3.87 billion from ZWG2.66 billion during the half year. The group disclosed a weighted average borrowing cost of 9.88% per annum.

That funding choice has so far been economically productive because net interest income doubled. The H2 test is whether additional loan yields continue covering the cost of wholesale and offshore funding as the book expands, particularly after the Reserve Bank of Zimbabwe began easing its policy rate.

 EFC Zambia impact

The acquisition of EFC Zambia gives the results their second layer. NMBZ acquired 96.29% of the Zambian deposit-taking microfinance institution in January 2026. It paid US$5 million for identifiable net assets subsequently measured at US$9.17 million, resulting in the US$3.83 million bargain purchase gain recognised through the income statement.

That gain is an accounting consequence of buying the business below the fair value assigned to its identifiable net assets. It materially increased H1 reported earnings, but it does not recur. The operating contribution is therefore the more useful measure of whether the acquisition is creating value.

EFC generated US$5.8 million of operating income, equivalent to 13.3% of NMBZ's group operating income excluding the acquisition gain, and ended June with US$46.7 million in assets. The business is predominantly an MSME lender, with approximately 95% of its portfolio directed toward that market.

From consolidation at the end of January through June, EFC contributed ZWG50.5 million in net operating income and ZWG27.7 million in PAT.

This means the acquisition has already moved beyond balance-sheet consolidation. EFC is generating recurring income, although its operating profit contribution remains considerably smaller than the accounting gain recognised on acquisition.

That distinction becomes important when assessing the headline 1,161% increase in reported PAT. NMBZ itself acknowledges that once the US$3.8 million acquisition gain is removed, underlying PAT is US$8.9 million. The analyst briefing goes one step further. After also reversing non-recurring restructuring expenses incurred in the prior period, management estimates underlying annualised ROE at approximately 17% in both periods.

The near-ninefold increase in underlying PAT therefore should not be interpreted as a ninefold increase in normalised shareholder returns. Part of the year-on-year jump comes from an unusually weak comparative period, while the stronger evidence of operating improvement sits in the doubling of net interest income, higher fees and much slower cost growth.

The expansion also carries a larger credit cost. Group expected credit impairment losses increased to ZWG95.1 million from ZWG25.6 million, almost four times the prior-period charge. Gross Stage 2 financial assets increased from ZWG225.1 million at December to ZWG302.1 million in June, while Stage 3 balances rose from ZWG176.6 million to ZWG193.5 million. 

The increase needs to be read against the much faster expansion in the overall credit book. Loans and advances grew 60% during the half year, while operating income before impairments expanded materially. On Equity Axis calculations, impairment charges absorbed about 18.8% of pre-impairment operating income, compared with roughly 16.9% in the prior period.

Credit costs have therefore risen, although they have not overwhelmed the additional income generated by the larger balance sheet. NMB Bank's disclosed NPL ratio fell to 2.69% from 4.52%, while loan-loss coverage improved to 148.7%. That metric applies specifically to NMB Bank rather than the consolidated NMBZ group, an important distinction now that EFC Zambia has added a separate microfinance credit portfolio. 

Group credit exposure is also becoming less concentrated in personal lending. Consolidated loans to individuals increased in absolute terms but fell from 31% to 26% of the portfolio, while services and other lending increased from 15% to 22%. Agriculture represented 18% and mining 17% at June.

The wider group structure is also beginning to contribute income outside traditional banking. XPlug Solutions generated ZWG13.8 million in fintech revenue, up from ZWG3.7 million, while property management, development and valuation income rose to ZWG7.7 million from ZWG2.1 million. These amounts remain small against NMBZ's core banking earnings, but they establish revenue-generating businesses around the bank rather than subsidiaries existing only as strategic options.

XPlug has expanded across eight African markets and was also responsible for digitising EFC Zambia as part of the acquisition integration. The significance for NMBZ is operational as much as financial. The group is attempting to use technology developed within one subsidiary to reduce the cost of scaling another, rather than building each regional operation independently.

The model still requires proof at larger scale. EFC accounts for less than a tenth of total group assets, while NMB Bank remains overwhelmingly responsible for the group's balance sheet and earnings. Diversification is underway, but NMBZ has not yet become a group in which non-bank businesses can independently absorb a major deterioration in banking performance.

NMBZ enters the second half with stronger recurring earnings, a 60% larger loan book, a substantially larger deposit base and its first meaningful regional financial-services operation. The immediate accounting benefit of acquiring EFC has already been recognised. The US$3.8 million bargain purchase gain will not repeat, leaving the second half to demonstrate how much recurring profit can be extracted from the enlarged group.

Three figures become particularly useful from here. The first is net interest income, because the loan book now carries a materially larger funding requirement. The second is the impairment charge, as the rapid increase in credit begins to season. The third is EFC's recurring operating contribution once the acquisition accounting gain is no longer present in the comparative earnings base The next stage is converting that scale into returns that remain strong without acquisition gains, prior-period restructuring distortions or a deterioration in credit quality.

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