Staff Writer
HARARE, CABS, Zimbabwe’s largest building society and a subsidiary of Old Mutual Zimbabwe says strong financial performance in 2025 was underpinned by disciplined lending and a resilient credit quality profile that saw its non-performing loans (NPL) ratio remain below 1 percent as the building society tightened risk controls while expanding its loan book.
Chief executive Mehluli Mpofu in an interview said the institution’s ability to maintain one of the lowest NPL ratios in the market reflects a deliberate strategy anchored on deep customer understanding and prudent credit assessment frameworks.
“Our NPL actually is less than 1 percent. For us, we invest a lot of time into understanding our customers, so that’s the first bit. We’ve got customers that we’ve had very long relationships with,” he said.
He added that even for new clients, the bank adopts a rigorous onboarding process designed to fully assess borrower profiles and sector dynamics before extending credit.
“Even the new ones that we onboard, we make sure we understand the customer. We then also go through a very rigorous credit process, which is really trying to understand the industry that the customer is in, the position they sit in that industry, the usual analysis that says how competitive are they, what are the likely issues they’re going to face,” he said.
Mpofu noted that this cautious approach often results in the institution declining certain lending opportunities, a trade-off he said ultimately safeguards the balance sheet.
“The outcome of that process is that at times there are certain loans we’re not going to do, and that really protects us, and that whatever money we didn’t advance, we’ve got a better chance of preserving,” he said.
For the year ended December 31, 2025, CABS profit before tax rose 19 percent to US$40,7 million from US$34,2 million in the prior year largely driven by growth in the lending book, improved margins and higher transaction volumes and values.
Net interest income increased significantly to US$38 million from US$29,9 million, supported by the expansion of the loan book, which is now predominantly denominated in United States dollars.
Loans and advances grew strongly, rising to US$259,8 million from US$195 million, reflecting sustained demand for credit across productive sectors of the economy.
The bank recorded a 33 percent increase in loans, with key disbursements directed towards agriculture (29 percent), mining (12,3 percent) and energy (4,5 percent), sectors considered critical to economic growth.
Deposits also registered robust growth, increasing 57 percent from the prior year. Mpofu said this significantly reduced the bank’s reliance on external funding sources and helped lower its overall cost of funds, reinforcing balance sheet stability.
He added that while deposits remain the primary funding source, credit lines continue to play a complementary role in supporting long-term lending, particularly for capital expenditure.
“You’ll see from our numbers that we actually maintain the same level of credit lines. I think we’re sitting at just over US$50 million. Credit lines still have room to play, because they bring in the long-term aspect,” he said.
He explained that the longer tenures associated with credit lines enable the bank to extend financing that aligns with investment cycles.
“You can get a credit line which is three years, and three years allows you to lend to someone of a similar tenure, which allows them to retool capital expenditure. That three-year profile is not something that you can get from deposits,” Mpofu said.
However, he acknowledged that such facilities come at a cost, requiring careful management.
“So we see deposits and credit lines being complementary. The only downside of credit lines being that they come at a cost. So it’s that cost that we need to manage. So use deposits in the first instance,” he said.
Beyond internal controls, Mpofu said the bank is increasingly incorporating global and geopolitical developments into its risk assessment frameworks, citing ongoing international conflicts as an example of external shocks that can affect local industries.
“The big development right now, as an example, would be this war, the Iran war. It has certain implications for certain industries. So right now, we’re actually going through a process of saying who’s the most impacted by fuel,” he said.
He added that rising input costs, such as fertiliser, are also being factored into lending decisions.
“If fertiliser is going to go up, who’s the most impacted? And all that goes into a process now that says to what levels can we lend,” Mpofu said.
On the operational front, CABS continued to invest in digital transformation and service delivery enhancements.
The bank successfully upgraded its core banking system and refreshed its corporate internet banking platform, onboarding both new and existing customers.
Infrastructure expansion also remained a priority, with the deployment of deposit-taking automated teller machines, including offsite units, increasing the network to over 80 machines.
The institution also enhanced its point-of-sale infrastructure to improve uptime and overall performance.
In addition, CABS continued its branch transformation programme, remodeling outlets into fully integrated service centres aimed at improving customer experience and operational efficiency.
