Staff Writer

CABS delivered a mixed but fundamentally resilient performance in the first half of 2026, with strong balance sheet growth and rising interest and fee income providing a solid platform for future expansion, even as higher funding and operating costs weighed on profitability.

The banking society’s loans and advances increased 33 percent to ZWG9,02 billion from ZWG6,78 billion in the comparative period, highlighting an aggressive expansion of credit intermediation as economic activity improved.

CABS managing director Mehluli Mpofu said the institution remained focused on deploying its balance sheet towards productive sectors while maintaining prudent credit underwriting and risk management.

“The increase in loans and advances in the first half of the year from ZWG6,78 billion to ZWG9,02 billion reflects the Society’s commitment to facilitating economic growth while maintaining prudent credit underwriting standards and robust risk management practices,” Mpofu said.

The expansion in lending is arguably one of the most significant features of CABS’ half-year performance because it demonstrates that the bank is positioning itself to benefit from improving macroeconomic conditions.

The growth also comes against a backdrop of high interest rates, although monetary conditions began easing during the period, with the Reserve Bank of Zimbabwe reducing the Bank Policy Rate from 35 percent to 30 percent in June.

For CABS, the lower policy rate could gradually support increased borrowing appetite, particularly among businesses seeking working capital and investment funding, while also easing financing pressures on existing borrowers.

Mpofu said the bank saw opportunities in agriculture, mining, manufacturing, small and medium-sized enterprises and other productive industries.

“Particular focus remains on supporting sectors that have the potential to drive economic activity and employment creation, including agriculture, mining, manufacturing, small and medium-sized enterprises and other productive industries,” he said.

The strategy is significant because CABS’ balance sheet growth is increasingly being driven by lending to the real economy rather than simply financial-sector activity.

On the income side, CABS recorded robust growth in its core banking revenues.

Net interest income increased 27,6 percent to ZWG513,95 million from ZWG402,79 million, supported largely by higher interest income from term loans, which rose to ZWG785,07 million from ZWG643,55 million.

The increase reflects the benefit of the bank’s expanded loan book and demonstrates the earnings potential of its decision to increase lending.

Net fee and commission income also strengthened, supported by increased transactional activity and the continued development of digital banking, payments and other fee-generating services.

As a result, net income from operations increased to ZWG1,30 billion from ZWG1,05 billion.

This 24 percent increase is important because it shows that CABS’ underlying banking franchise remained capable of generating stronger revenues despite a difficult operating environment.

Mpofu said the growth in fee income demonstrated the increasing contribution of transactional and digital banking activities to the Society’s performance.

Digitalisation is therefore becoming more than a customer-service initiative for CABS. It is increasingly an important revenue and efficiency driver.

The bank continued investing in digital banking platforms, payments infrastructure and technology during the period, with the objective of improving customer convenience, operational efficiency and service reliability.

“We will continue to enhance our digital channels, strengthen cybersecurity and improve the reliability and accessibility of our banking platforms,” Mpofu said.

The emphasis on digital channels also positions CABS to capture a greater share of everyday financial transactions as customers increasingly migrate away from traditional branch-based banking.

Despite stronger revenues, profitability declined during the period as costs increased at a faster pace.

Net interest income growth was partially eroded by a 41,26 percent increase in funding costs, which rose from ZWG100,81 million to ZWG142,56 million.

Operating expenses were an even bigger drag, increasing to ZWG1,05 billion from ZWG762,79 million.

Consequently, operating profit declined to ZWG418,12 million from ZWG497 million, while profit before tax fell to ZWG449,70 million from ZWG544,50 million.

Profit after tax stood at ZWG299,25 million.

The numbers point to an important strategic challenge for CABS: converting its significant revenue and balance sheet expansion into stronger bottom-line growth.

The bank attributes the increase in costs to continued investments in technology, people, infrastructure and business growth, alongside broader economic cost pressures.

From an analytical perspective, however, the decline in profitability does not necessarily signal weakening core operations. Rather, it indicates that CABS is currently carrying the cost of investing for future growth while simultaneously dealing with higher funding expenses.

 The critical issue going forward will be whether these investments generate sufficient additional revenue and efficiency gains to improve profitability. 

The bank has already begun investing in branch refurbishment and modernisation, aimed at improving customer experience and service delivery. 

If successfully executed alongside digital expansion, the strategy could create a more integrated banking model in which branches handle more complex customer requirements while routine transactions migrate to digital platforms. 

Stronger balance sheet provides room for expansion

The 13,11 percent increase in total assets further reinforces the view that CABS is in an expansion phase.

The growth was supported by increased customer deposits, loans and advances and a sound liquidity position.

A growing funding base provides the institution with greater capacity to expand lending, particularly as economic conditions become more supportive.

Mr Mpofu said CABS would leverage its balance sheet, liquidity position and growing funding base to support customers and productive sectors of the economy.

The quality of that expansion will nevertheless remain crucial.

 Rapid loan growth can create asset-quality risks if underwriting standards are compromised, particularly in an economy exposed to currency, interest-rate and climate-related risks.

 CABS appears conscious of this trade-off, maintaining that growth will be accompanied by prudent credit origination and robust risk management.

 This will be particularly important in agriculture, where climate risks can affect repayment capacity, and in sectors such as mining and manufacturing, where commodity prices, foreign-exchange availability and operating costs can influence cash flows.

Digital and human capital investments

 CABS’ technology investments are being complemented by continued spending on its workforce.

The bank recognises that digital transformation requires employees with appropriate technical, leadership and customer-service capabilities.

It continued investing in employee development, including technical competencies, leadership development and customer service.

The CABS Banking School, graduate development initiatives and management development programmes form part of this strategy.

The investments could prove particularly important as competition among financial institutions increasingly shifts from traditional branch networks towards digital platforms, payments and customer experience.

Opportunities ahead

CABS enters the second half of 2026 with a stronger lending platform and an opportunity to translate improving macroeconomic stability into increased financial intermediation.

The reduction in the Bank Policy Rate to 30 percent provides some relief, although monetary conditions remain relatively tight.

Mpofu said the bank would continue monitoring interest-rate movements and their impact on customer demand, credit quality and net interest margins.

The strength of Zimbabwe’s mining industry, particularly gold and platinum group metals, also presents opportunities for CABS to expand financing to businesses linked to these sectors.

Agriculture remains another priority, particularly as the country seeks to strengthen climate resilience and improve productivity.

The bank’s engagement with development finance institutions and strategic partners could further expand access to affordable, appropriately structured funding for businesses that might otherwise struggle to secure long-term capital.

Overall, CABS’ first-half performance reflects a bank prioritising growth and market positioning while absorbing the near-term cost of that strategy.

Revenue growth, a substantially larger loan book and increased digital activity provide evidence of strengthening underlying operations. The decline in operating profit and profit before tax, however, underscores the need for tighter cost management and greater returns from investments.

The next phase of CABS’ strategy will therefore be less about simply expanding the balance sheet and more about ensuring that growth translates into sustainable profitability.

 With a stronger funding base, rising lending activity, improving macroeconomic conditions and continued investment in technology and people, CABS appears well positioned to deepen its role in Zimbabwe’s financial intermediation.