• Loans rose 78% to US$277.1 million, significantly outpacing customer deposit growth of 31%
• Operating income increased 56% to US$71.6 million as net interest income almost doubled
• A new US$20 million BII facility strengthens lending capacity as NMBZ expands into Zambia

Harare- NMBZ Holdings has recorded a 78% increase in net loans and advances to US$277.1 million during the first nine months of 2026, significantly outpacing the 31% growth in customer deposits and signalling an increasingly aggressive deployment of its balance sheet into lending.

The expansion supported a 56% increase in operating income to US$71.6 million, with interest earnings emerging as the fastest growing component of the group's revenue. The divergence between loan and deposit growth places greater importance on NMBZ's ability to mobilise stable funding, maintain lending margins and preserve asset quality as its regional operations expand.

According to the group's trading update for the nine months ended 30 September 2026, operating income increased from US$45.8 million to US$71.6 million, supported by growth in net interest income to US$32.7 million. Noninterest income rose 33% to US$38.9 million, while total assets expanded 51.3% from US$340.6 million in December 2025 to US$515.3 million. Shareholder funds increased from US$84.2 million to US$95.9 million, with the group reporting adequate capital and liquidity buffers.

The results reveal a changing earnings structure within NMBZ's banking operations. Net interest income accounted for approximately 45.7% of operating income, compared with an estimated 36% during the corresponding period in 2025. Noninterest income remained the larger contributor at 54.3%, although lending income is gaining prominence as the group expands credit to productive sectors.

Net loans and advances increased by US$121.5 million from December 2025, while customer deposits grew by US$40 million to US$169.7 million. Credit expansion was therefore approximately three times the absolute increase in customer deposits, indicating that the growth in lending has been supported by a broader funding structure.

Total reported funding reached US$381.6 million at the end of September, substantially exceeding customer deposits. The disclosure does not provide a detailed breakdown of other funding sources, limiting an assessment of their cost, maturity profile and contribution to lending growth.

On the published consolidated figures, net loans represented approximately 163% of customer deposits, compared with 120% at the beginning of the year. This is an analytical comparison of group balances and should not be interpreted as NMB Bank's regulatory loan to deposit ratio, since the consolidated figures include activities beyond the Zimbabwean banking subsidiary.

The widening relationship nevertheless raises an important balance sheet question. Sustained credit expansion requires funding that is sufficiently stable and appropriately priced to support longer lending maturities. Greater reliance on wholesale or institutional facilities could introduce refinancing and interest cost pressures, depending on their contractual terms.

NMB Bank secured a US$20 million facility from British International Investment during the quarter, providing additional financing capacity for agriculture and other strategic value chains. The facility is equivalent to approximately 16.5% of the increase in reported net loans since December, although the trading update does not disclose how much had been drawn or deployed by September.

The funding arrangement supports NMB's strategy of expanding productive sector lending. Its contribution to earnings will depend on the pricing of loans, funding costs, repayment performance and the ability of supported businesses to generate sufficient cash flows.

The near doubling of net interest income indicates that the enlarged loan portfolio is contributing more substantially to operating income. NMBZ's noninterest income increased to US$38.9 million, representing growth of 33%. Although this remains the largest earnings component, its slower growth relative to interest income has reduced the group's dependence on transactional and other nonfunded income.

This development is occurring as Zimbabwe's banking sector responds to regulatory pressure on transaction charges and greater competition for customers. Expanding interest earnings offers banks an alternative source of income, provided credit growth is supported by appropriate pricing and disciplined loan administration.

The shift also changes the group's exposure to financial risk. Transactional income generally requires less balance sheet capital than lending, while interest income introduces credit risk, funding requirements and potential impairment expenses.

The trading update does not disclose profit after tax, impairment charges, nonperforming loans or net interest margins. Consequently, the increase in operating income cannot yet be taken as evidence of a corresponding improvement in profitability or the quality of the expanded loan portfolio. These measures will be necessary to establish how effectively NMBZ is converting its larger asset base into sustainable earnings.

Zambia Expansion Adds a New Growth Dimension

NMBZ has also completed the first 100 days of integrating EFC Zambia into its regional operating model, marking progress in its strategy to develop banking and financial services activities beyond Zimbabwe. The group migrated EFC Zambia onto its technology platform, creating the infrastructure for enhanced digital channels and expansion of its lending proposition to small and medium enterprises.

The integration offers opportunities to extend NMBZ's technology, credit management and product capabilities into the Zambian market. It also increases the importance of maintaining consistent risk management standards across subsidiaries operating under different regulatory and economic conditions.

The group has continued expanding XPlug Solutions' regional technology activities, while NMB Properties progressed residential stand servicing in Bulawayo. These investments broaden NMBZ's earnings opportunities beyond conventional banking, although their individual financial contributions were not disclosed in the trading update.

The absence of segmented earnings limits the ability to assess how much of the increase in consolidated income and assets originated from the existing Zimbabwean banking business and how much was associated with regional expansion.

NMBZ's balance sheet expansion comes as Zimbabwe's monetary environment continues to stabilise. The Reserve Bank reduced its policy rate to 27.5% with effect from 28 September 2026, following an earlier reduction to 30% in June.

Lower policy rates could gradually reduce funding costs and support credit demand, although the effects on bank lending margins will depend on the pricing of deposits, institutional funding and new loans.

The group has identified agriculture, mining and other productive sectors as priorities, supported by the improved domestic economic outlook and demand for United States dollar financing.

Equity Axis takes the view that NMBZ's credit expansion represents a meaningful change in its earnings strategy, with lending becoming a stronger contributor to operating income. The 78% increase in net loans demonstrates the scale of the balance sheet deployment, while the more moderate growth in customer deposits places greater emphasis on the composition and cost of funding.

The US$20 million BII facility and Zambia expansion provide additional opportunities for growth. Their commercial contribution will depend on disciplined credit selection, competitive funding costs and the capacity of the enlarged operations to generate returns after impairment and operating expenses.

The next measure of performance will be its ability to maintain credit quality, grow stable deposits and translate the expanded loan portfolio into stronger profitability. The distinction between balance sheet expansion and sustainable earnings growth will become increasingly important as the group deepens its lending activities and regional presence.

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