Zimbabwe’s banking sector is undergoing a strategic shift, with major financial institutions increasingly turning to deposit mobilisation and loan growth as regulatory pressure squeezes traditional fee income streams.
The shift comes as authorities tighten scrutiny over banking fees, forcing institutions to rethink profitability drivers.
Trading updates from First Capital Bank (FCB), ZB Financial Holdings (ZBFH) and NMBZ Holdings (NMBZ) for the first quarter to March 31 reveal a common theme, lenders are recalibrating their business models, placing greater emphasis on core banking income, customer deposits and lending expansion rather than transaction charges.
NMBZ was the most explicit about the changing operating model.
“A key development during the quarter was the downward revision of bank charges, including caps on selected transaction fees and the removal of selected charges,” the bank said.
“These measures are expected to increase pressure on non-interest income across the banking sector, reinforcing the need to deepen funded income, grow quality deposits and improve operating efficiency.”
That statement captures a broader repositioning across the sector.
For years, Zimbabwean banks leaned heavily on fees and commissions, particularly during periods of volatile inflation and currency instability, when transactional income often provided a more predictable earnings cushion than long-term lending. But with tighter monetary controls and regulatory intervention limiting that income stream, the pendulum appears to be swinging back toward traditional banking fundamentals.
FCB’s performance illustrates the trend.
The lender reported a 32 percent year-on-year increase in customer deposits to ZWG5.4 billion, while its gross loan book rose six percent to ZWG3.5 billion. Total income climbed 16 percent to ZWG594 million.
Management directly linked its growth to customer acquisition and balance sheet expansion.
“Strategic focus on customer acquisition, balance sheet optimisation, digital transformation and disciplined execution continued to drive growth across key performance indicators,” the bank said.
“Customer deposits grew by an impressive 32 percent year-on-year… reflecting continued market confidence in the Bank’s franchise, liquidity strength, and service delivery capabilities.”
For FCB, deposit growth is not merely a liquidity measure, it is the fuel for future asset creation.
NMBZ has adopted a similar strategy, but with a sharper lending focus.
“In response to the evolving fee-income environment, the group is placing increased focus on core lending, with particular emphasis on retail, SME and productive-sector lending,” the bank said.
That pivot is already showing in the numbers.
Net loans and advances surged 27 percent during the quarter to US$198.2 million, while customer deposits rose 19 percent to US$154.6 million. Operating income jumped 59 percent to US$24.2 million, although part of that growth was boosted by the first-time consolidation of EFC Zambia.
The acquisition also reflects another emerging strategy: expansion beyond Zimbabwe’s borders to diversify earnings and tap new lending markets.
ZBFH presents a slightly different adaptation.
While commissions and fees still grew seven percent to ZWG378.22 million due to higher transaction volumes, the group acknowledged pressure in lending income.
“Net income from lending activities declined during the period, primarily due to reduced asset creation arising from liquidity constraints within the group’s banking operations,” ZBFH said.
That disclosure highlights a central challenge facing lenders: even as banks seek to grow loan books, restrictive liquidity conditions can constrain credit creation.
ZBFH’s response has been diversification.
Insurance revenue rose 21 percent, while property income increased 27 percent, showing how universal financial groups are building alternative revenue buffers rather than relying solely on conventional banking spreads.