• The bank swung from a restated loss of ZWG205 million in 2024 to a profit after tax of ZWG251 million in FY2025, driven by strong operational performance and loan growth
• A ZWG248 million prior period error was identified, and KPMG issued a qualified opinion on the consolidated financial statements due to insufficient evidence on foreign exchange gains for Q1 2024
• The bank faced a ZWG138 million tax disallowance and ZWG127 million restructuring costs, which impacted earnings; adjusted profit would be approximately ZWG472 million

Harare- NMBZ Holdings Limited has swung from a restated loss of ZWG205 million in 2024 to a profit after tax of ZWG251 million in FY2025, a turnaround that looks decisive until the audit opinion is read carefully. KPMG has issued a qualified opinion on the consolidated financial statements because the banking subsidiary changed its core banking system on 1 April 2024 and was unable to provide foreign exchange gains data for the period 1 January to 31 March 2024.

The same financial statements disclose a ZWG248 million prior period error, two separate errors arising from system migration and manual journal processing, that required the retrospective restatement of the 2024 comparative figure

Total assets grew 27% to ZWG9 billion, while loans and advances expanded 48% to ZWG4.1 billion. The group acquired a controlling stake in EFC Zambia subsequent to year end, extending its regional footprint. POS transaction volumes grew 1,114% in USD terms. The group raised over USD70 million in offshore credit lines.

On the surface, FY2025 reads as a year of decisive recovery and regional expansion for one of Zimbabwe's mid-tier commercial banks. The audit opinion, the prior period error, the restated 2024 comparatives, and the tax disallowance that sat inside the numbers tell a more complicated story, and that story begins not with the 2025 profit but with what happened to the 2024 profit when the 2025 audit was conducted.

The single most analytically significant fact in NMBZ Holdings' FY2025 results is not the ZWG251 million profit, but what happened to 2024. When NMBZ reported its FY2024 results, the group recorded a profit of ZWG43 million. In the FY2025 financial statements, that ZWG43 million profit has been restated to a ZWG205 million loss, a ZWG248 million swing in a single restatement exercise, applied retrospectively in accordance with IAS 8.

Two separate errors produced that restatement. The first error involved duplicate entries to the Other Liabilities and Foreign Exchange Gains accounts, transactions that had been erroneously duplicated, overstating foreign exchange gains and understating liabilities by ZWG144 million.

The second error arose from manual journal entries processed to correct system posting delays during the core banking system migration. Those manual entries incorrectly included postings to the foreign exchange movements account and omitted reconciling items on bank reconciliations that should have been recognised as liabilities , a further ZWG104 million misstatement.

Combined, the two errors overstated 2024 net foreign exchange gains by ZWG248 million, overstated retained earnings by ZWG248 million, and understated other liabilities by ZWG248 million. A bank whose reported 2024 profit was ZWG43 million actually incurred a loss of ZWG205 million , and the error was not identified during the 2024 audit but during the 2025 reporting process.

Both errors are attributed to the system migration, the transition to the SAP core banking system that commenced on 1 April 2024 and became fully operational on 1 October 2025. The manual journal entries used to bridge system delays created the conditions for both the duplicate entry error and the bank reconciliation omission.

This is not a narrative that suggests deliberate misstatement, and the IAS 8 restatement process is the correct accounting response when prior period errors are identified, but a ZWG248 million misstatement , large enough to convert a ZWG43 million profit into a ZWG205 million loss , in a set of financial statements that were audited, published, and relied upon by investors for an entire year is a material governance and control failure that goes beyond the operational inconvenience of a system migration.

The prior period error and the audit qualification are connected but distinct. The qualification that KPMG has carried into the FY2025 audit opinion relates specifically to the foreign exchange gains for the period 1 January 2024 to 31 March 2024. When the banking subsidiary changed its core banking system on 1 April 2024, it was unable to provide information relating to net foreign exchange gains for the preceding quarter.

KPMG could not obtain sufficient appropriate audit evidence over those Q1 2024 foreign exchange figures. The 2024 audit opinion was qualified as a result. The 2025 audit opinion is qualified because the 2025 financial statements are being compared against 2024 comparatives that include a period the auditors could not fully verify.

This qualification has a specific and important analytical implication. The net foreign exchange gains line in the 2024 comparative income statement , restated to ZWG939 million , includes a component covering Q1 2024 for which neither the auditor nor, apparently, the bank's own systems can produce supporting data. The ZWG939 million figure in the 2024 comparative may be accurate, may be understated, or may be overstated in respect of Q1 2024 , and no audit procedure has been able to confirm which of those three possibilities is correct.

The prior period restatement that reduced 2024 net foreign exchange gains by ZWG248 million addressed the duplicate entry and manual journal errors for Q2 through Q4 2024. It does not address the Q1 2024 data gap, because the Q1 data was never available to be corrected.

Investors in NMBZ Holdings are therefore working with a 2025 income statement whose year-on-year comparison rests on a 2024 comparative that the auditors have qualified for insufficient evidence, that has already been restated by ZWG248 million for two separate errors, and that contains a Q1 data gap that no restatement has resolved.

The profit turnaround from negative ZWG205 million to positive ZWG251 million is real in 2025 terms , the 2025 numbers have received an unqualified opinion on the separate financial statements and a qualified opinion on the consolidated statements only in respect of the comparative period impact, but the magnitude of that turnaround is measured against a 2024 base that no analyst should treat as reliable without understanding what it has been through.

The earnings picture in FY2025 is further complicated by a tax ruling whose financial impact was material and whose retrospective application raises questions about the tax environment in which Zimbabwean banks operate. The Zimbabwe Revenue Authority conducted a reassessment of NMBZ's tax submissions for the period 2019 to 2023, disallowing the deduction of interest expense in calculating taxable income.

The relevant provision, Section 16.1(o) of the Income Tax Act , was interpreted by ZIMRA as prohibiting banks from deducting interest expense as an allowable business cost. The disputed section was subsequently repealed with effect from 1 January 2026, but the repeal was applied prospectively, meaning the historical disallowances for 2019 through 2023 remained payable.

The cumulative financial impact of this disallowance recorded in FY2025 was ZWG138 million ,  ZWG94.5 million charged in 2025 and ZWG43.7 million in the restated 2024 figures. Interest expense is the primary funding cost of any banking operation. Disallowing its deduction from taxable income is equivalent to taxing gross interest revenue rather than net interest income , a tax treatment that no bank in a normally functioning tax environment would face, and one that was applied retrospectively across six years of operations before the relevant provision was repealed.

The group's effective tax rate was significantly elevated by this ruling, and the ZWG94.5 million 2025 charge alone represents approximately 38% of the ZWG251 million profit after tax the group reported. Without the tax disallowance, FY2025 profit after tax would have been approximately ZWG345 million , a materially different earnings outcome and a more accurate representation of the underlying operational performance.

The chairman's statement acknowledges the tax ruling and notes that the repeal effective January 2026 will remove the charge going forward. But the ZWG138 million already paid cannot be recovered, and the prior years' obligation remains settled. It is a permanent impairment to earnings across the period of application that the 2026 repeal does not undo.

A third non-recurring item suppressed FY2025 earnings independently of both the tax disallowance and the audit complications. The group undertook a comprehensive staff rationalisation and restructuring exercise during the year at a cost of ZWG127 million, primarily comprising severance payments and other termination costs.

The restructuring is described as a deliberate strategic intervention aimed at streamlining operations, reducing the cost base, and enhancing operational efficiency , a legitimate and necessary exercise for a group repositioning itself as a technology-enabled regional financial services platform.

The combined impact of the tax disallowance at ZWG94.5 million and the restructuring charge at ZWG127 million is ZWG221.5 million in non-recurring charges against a reported profit after tax of ZWG251 million. Adjusted for these two items , which together represent genuine one-off costs that management has identified as non-recurring , the underlying recurring profit of the group in FY2025 would be approximately ZWG472 million.

That is the number that best represents NMBZ's sustainable earnings capacity entering 2026, and it is materially different from both the reported ZWG251 million and the restated 2024 loss of ZWG205 million against which the turnaround is being measured.

Setting aside the audit qualification, the prior period restatement, the tax disallowance, and the restructuring charge, the underlying operational performance was  genuinely strong across multiple dimensions and deserves recognition on its own terms. Operating income grew 8% to ZWG2.03 billion, driven primarily by a 83% increase in interest income as the loan book expanded.

Fee and commission income grew 30% to ZWG1.2 billion, with digital banking fees up 49% to ZWG199 million and international banking commissions up 43% to ZWG200 million. POS transaction volumes grew 1,114% in USD terms , a figure that reflects the accelerating adoption of digital payment channels and the group's investment in its NMBConnect digital platform.

Loans and advances grew 48% to ZWG4.1 billion, funded primarily by the deployment of USD70 million in offshore credit lines secured during the year , a significant external funding achievement that reflects international creditors' confidence in the group's creditworthiness.

The loan portfolio is predominantly corporate at 57%, led by individual borrowers at 31% and mining at 18%, with the NPL ratio holding at 3.40% , within the RBZ's 5% benchmark and stable from the prior year. Customer deposits grew 44% to ZWG3.4 billion, indicating that the commercial banking franchise is deepening its deposit base alongside its lending growth.

The Xplug Solutions fintech subsidiary has reached profitability and established presence in eight African countries, generating ZWG26 million in fintech revenue in FY2025 against ZWG11.3 million in 2024. NMB Properties is developing a pipeline of cluster home, residential stand, and retail projects.

The capital adequacy ratio of the banking subsidiary stood at 25.47% against a regulatory minimum of 12%, and the liquidity ratio closed at 53% against a statutory minimum of 30%. The external credit rating improved from BBB to BBB+ during the year, reflecting the group's improved financial position in GCR's assessment.

The January 2026 acquisition of a controlling stake in EFC Zambia Limited , a 32-year-old deposit-taking microfinance bank with a 95% MSME loan portfolio , is the strategic development that the CEO's statement places at the centre of the group's forward narrative. The acquisition strategy, described as acquire, digitise, optimise and scale, is conceptually coherent and operationally well-suited to Xplug's demonstrated regional digital deployment capability.

EFC Zambia provides an entry point into a high-growth microfinance market with a proven client base, established regulatory relationships, and an existing loan portfolio that Xplug's technology can be deployed to scale.

NMBZ enters 2026 with borrowings of ZWG2.58 billion , up 27% from ZWG2.04 billion , a restructuring exercise whose cost savings have not yet fully materialised, a tax environment that is just beginning to normalise following the 2026 repeal, and a core banking system that became fully operational only in October 2025 and is still being optimised.

Adding a cross-border subsidiary consolidation to that operational agenda in the same year that the domestic banking platform is being stabilised and the restructuring savings are being realised is an execution challenge that the group's management team is capable of managing ,  but one whose complexity should not be understated in the investor communications.

A subsequent event disclosed in the financial statements adds a further dimension to the 2026 earnings outlook. Subsequent to the reporting date, the Reserve Bank of Zimbabwe issued its Monetary Policy Statement requiring banking institutions to review and reduce bank charges and fees applicable to customers with effect from 1 April 2026.

Fee and commission income of ZWG1.2 billion represented 59% of NMBZ's total operating income in FY2025. Any material reduction in fee levels , particularly transaction fees, digital banking charges, and card fees, which together account for a substantial share of the ZWG1.2 billion total , will directly compress the revenue line that has been the primary driver of non-interest income growth. Management acknowledges the directive and is working on revenue diversification to mitigate the impact.

The extent of that mitigation, and whether the loan book growth and Zambia consolidation can offset reduced fee income in 2026, will be the central earnings question of the year ahead.

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