Zimbabwe’s banking sector sound: RBZ

SAMANTHA MADE

Zimbabwe’s banking sector is safe and sound despite prudential issues at a few institutions, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mushayavanhu has said.

Presenting the Monetary Policy Statement (MPS) on Thursday, Dr Mushayavanhu disclosed that the central bank is actively addressing the concerns in line with the country’s financial regulations.

“On aggregate, the banking sector remains safe and sound as reflected by the satisfactory key financial soundness indicators. As at 30 June 2025, the condition and performance of the banking sector was satisfactory,” Dr Mushayavanhu said.

“There are, however, some issues of prudential concern at a few institutions, and the Reserve Bank is instituting appropriate and proportionate supervisory action in terms of the Banking Act [Chapter 24:20] and the Microfinance Act [Chapter 24:30],” he added.

During the first half of 2025, the RBZ registered 26 credit-only microfinance institutions, pointing to continued financial sector diversification.

Dr Mushayavanhu reported strong asset growth, with total banking sector assets rising from ZiG161.4 billion as at 31 December 2024 to ZiG191.8 billion by 30 June 2025. The asset portfolio remained largely tilted towards lending activities.

“Asset mix remained skewed towards loans and advances, which accounted for 32.9% of total banking sector assets as at 30 June 2025 [Dec 2024: 31.3%],” he said.

Aggregate sector loans and advances stood at ZiG67.5 billion by mid-year, up from ZiG55.9 billion in December 2024, with foreign currency-denominated loans comprising a dominant share.

“Foreign currency denominated loans accounted for 88.4% of the banking sector aggregate loans,” the central bank chief noted.

He highlighted that Zimbabwe’s key productive sectors—agriculture, manufacturing, and distribution—continued to benefit from credit allocations, receiving a combined 72.0% of total loans by 30 June 2025.

“Specifically, agriculture, manufacturing and distribution sectors accounted for 16.8%, 12.2% and 10.9% of total loans, respectively,” Dr Mushayavanhu said.

Liquidity indicators also pointed to strong sector health. The average prudential liquidity ratio was 56.8% as at 30 June 2025, with 18 out of 19 institutions complying with the regulatory minimum of 30%.

In terms of deposit growth, total banking sector deposits increased from ZiG89.1 billion as at 31 December 2024 to ZiG112.8 billion by 30 June 2025. Foreign currency deposits made up the bulk of these.

“Foreign currency denominated deposits accounted for 84.7% of total deposits as at 30 June,” he said.

Dr Mushayavanhu also applauded the sector’s increasing embrace of sustainability principles.

“Adoption of sustainability standards continues to gain momentum in the Zimbabwean banking sector with 15 out of 19 banking institutions, two development finance institutions, and one deposit-taking microfinance institution undergoing the Sustainability Standards & Certification Initiative (SSCI) being driven by the European Organization for Sustainable Development (EOSD),” he said.

He noted that banks complied with the Monetary Policy Statement directive of February 2025 requiring the appointment of qualified board-level sustainability champions by March 31.

“The board sustainability champions are expected to, among others: lead the transformation and reorientation of the banking institutions into sustainable, green, and climate-proofed institutions through the adoption of sustainable banking practices; play a pivotal role in steering the banking institutions towards long-term sustainability with a forward-looking perspective; lead the integration of sustainability and climate change considerations into the institutions’ strategies, governance and risk management systems; and promote the alignment of the institutions’ operations to the country’s national development priorities and other relevant guidance by international standard-setting bodies,” Dr Mushayavanhu said.

The central bank’s assessment underscores both the resilience of Zimbabwe’s financial institutions and the regulatory vigilance in safeguarding sector stability amid ongoing macroeconomic challenges.