• Operating income fell 41% as costs and impairment charges increased sharply
• Stage 2 loans rose 145% to ZWG763.2 million
• Deposits and lending grew 16%, but net interest income remained broadly flat

Harare- CBZ Holdings’ profit after tax fell 20.3% to ZWG691.6 million in the half year ended June 2026 from ZWG868.1 million a year earlier, with the deeper earnings deterioration occurring before tax as higher operating costs and credit losses absorbed income from an expanding balance sheet.

Total income was almost unchanged at ZWG2.86 billion against ZWG2.85 billion, yet operating expenditure increased 24.1% to ZWG1.97 billion. Expected credit losses rose to ZWG165.7 million from ZWG26.7 million, reducing operating income by 41.4% to ZWG725.8 million. Profit before tax consequently declined 33.2% to ZWG856.8 million.

The result places CBZ’s cost and credit conversion under greater scrutiny because the group continued adding assets during the same period. Total assets increased 12.3% from December to ZWG46.21 billion, deposits rose 16% to ZWG32.20 billion and loans and advances expanded 16.5% to ZWG11.87 billion. The larger balance sheet therefore generated substantially greater scale without producing comparable growth in income during the first six months.

Funded earnings remained largely stationary. Group net interest income declined 1.6% to ZWG958 million even though interest income increased to ZWG1.39 billion from ZWG1.31 billion. Interest expense rose 27.3% to ZWG428.1 million, absorbing the additional interest revenue as money market deposit costs increased from ZWG45.6 million to ZWG138.1 million.

The same pressure is visible within the banking operation, CBZ Holdings’ largest business. Banking net interest income was virtually flat at ZWG858.3 million, while net fee and commission income fell 7.7% to ZWG1.19 billion. Treasury and dealing income increased to ZWG427.6 million from ZWG416.6 million, providing some support after the Reserve Bank of Zimbabwe’s reduction of selected banking charges placed pressure on transaction income.

CBZ’s operating cost growth then widened the gap between scale and earnings. Group staff costs rose 24% to ZWG1.15 billion while administrative expenses increased 19.2% to ZWG711.1 million. Within the banking segment, staff costs rose to ZWG725 million from ZWG628.6 million and administration expenses increased to ZWG638.8 million from ZWG511.2 million.

Technology spending was one contributor to the higher administration bill. Bank computer costs increased to ZWG243.4 million from ZWG193.8 million, while office expenses rose to ZWG249.7 million from ZWG190.8 million. The commercial test for that spending moves into the second half: transaction volumes, customer acquisition and processing efficiency need to produce revenue growth capable of absorbing the enlarged cost base.

Credit risk produced the sharper movement. Within CBZ Bank, Stage 2 loans increased from ZWG311.9 million in December to ZWG763.2 million in June, a rise of about 145%. Stage 3 loans increased from ZWG479.9 million to ZWG589.3 million, while total expected credit loss allowances against loans rose from ZWG367.4 million to ZWG553.4 million.

Stage 2 captures exposures where credit risk has increased materially since origination, including underperforming facilities that have not yet reached the credit impaired classification. CBZ therefore enters the second half with ZWG763 million of lending requiring closer monitoring before considering the separate ZWG589 million Stage 3 pool.

The rise in credit costs does not mean the loan expansion has already failed. Gross lending continued expanding and much of the portfolio remains performing. It does mean that the next phase of growth has to be judged against the incremental income produced by new credit and the impairment charge required to support it.

Diversification provided additional earnings support during the half year. Asset management profit before tax increased to ZWG33.1 million from ZWG19.5 million, insurance rose to ZWG39.4 million from ZWG17.8 million and the agro business produced ZWG48 million after a loss in the prior period. Banking profit before tax, however, fell from ZWG1.40 billion to ZWG890.1 million, leaving the improvement in smaller businesses insufficient to restore group earnings to the prior year level.

Income from equity accounted investees also increased sharply to ZWG137.4 million from ZWG54.3 million. That contribution helped lift profit after operating income, while the group’s tax charge fell to ZWG165.2 million from ZWG414.1 million. The effective tax rate declined from 32.3% to 19.3%, partly because exempt income accounted for a much larger adjustment in the tax reconciliation.

The lower tax burden explains why the 20% decline in profit after tax was considerably smaller than the 33% fall in profit before tax and the 41% contraction in operating income. This places greater weight on the underlying operating measures when assessing the direction of earnings into the second half.

CBZ still carries considerable balance sheet capacity, with ZWG32.2 billion in deposits against ZWG11.9 billion in loans and advances. The first half therefore leaves management with room to expand credit selectively, while the quality of that deployment becomes increasingly important as Stage 2 exposures and impairment charges rise.

For the second half, the clearest measures are operating cost growth, Stage 2 migration, credit loss charges and net interest income. CBZ has continued to enlarge its funding and asset base; stronger earnings conversion now requires income to begin growing faster than the costs and credit provisions attached to that scale.

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