HARARE — First Capital Bank significantly expanded its lending in the first half of 2026, but the composition of that growth shows a marked shift towards trade and services as the lender sought to deploy a rapidly growing deposit base.
Gross loans and advances rose by US$36.62 million, from US$131.99 million at December 2025 to US$168.62 million by June 2026, representing growth of about 28%.
According to Equity Axis, however, the headline expansion understates the extent to which new credit was concentrated in a single segment. Trade and services absorbed US$23.52 million, or approximately 64% of all incremental lending, with exposure rising from US$16.64 million to US$40.17 million.
The segment’s share of the loan book consequently increased from 13% to 24%.
Physical persons received a further US$7.49 million, while light and heavy industry secured US$3.70 million. Agriculture received less than US$1 million in additional credit, transport increased by only US$475,000 and energy and minerals by US$907,000. Lending to financial services declined.
The shift represents a significant change from First Capital’s earlier portfolio structure.
In the bank’s 2022 comparative, its US$66.97 million loan book was distributed relatively broadly, with physical persons accounting for 26%, light and heavy industry 22%, agriculture 21% and transport and distribution 17%. Trade and services represented 13%.
By December 2025, however, household lending had become dominant, accounting for 55% of the US$131.99 million gross loan book, equivalent to US$72.70 million.
The first-half expansion has begun reversing that concentration. Although lending to individuals increased to US$80.18 million, their share fell to 47% because corporate credit expanded considerably faster.
Trade becomes the engine of credit growth
The Zimbabwe Financial Mail said the changing composition of First Capital’s balance sheet offers a more revealing picture of its strategy than the headline lending growth.
The bank appears to be moving away from its heavy reliance on household lending towards commercially oriented borrowers capable of generating transaction flows alongside interest income.
Trade and services can provide banks with working-capital lending, deposits, payments activity, foreign-exchange transactions and other fee-generating business. This makes the segment particularly attractive when banks are seeking to deploy excess liquidity while maintaining relatively short lending tenors.
The strategy is also consistent with First Capital’s funding position.
Customer deposits increased from US$200.06 million at December 2025 to US$248.76 million in June, while corporate and investment banking demand deposits alone rose by more than US$43 million to approximately US$151 million.
The bank consequently entered the year with substantially more funding capacity and found much of the additional credit demand among commercial borrowers.
Net interest income rose 15% to US$21.71 million, supported by the expansion of the earning asset base. The loan-to-deposit ratio increased from roughly 64% at December to 66% in June, while liquidity remained above regulatory requirements.
Productive sectors lose relative weight
The development nevertheless raises a broader question about the direction of bank credit in Zimbabwe’s recovering economy.
First Capital’s historical portfolio was significantly more exposed to sectors associated with physical production. Agriculture, industry and transport collectively accounted for about 60% of the 2022 loan book.
By June 2026, those three sectors represented only about 27%.
Agriculture’s share declined from 21% to 11%, light and heavy industry from 22% to 12%, and transport from 17% to 4%.
Trade and services moved in the opposite direction, climbing from 13% to 24%.
Equity Axis noted that the figures should not automatically be interpreted as evidence that trade lending is economically unproductive. Commerce is integral to almost every productive sector, financing inventory, distribution, imports, working capital and other activities that allow businesses to operate.
The distinction is instead in the nature of the credit.
Shorter-term commercial lending can recycle rapidly through the banking system, while financing machinery, irrigation, mining projects or industrial capacity can remain committed for several years and potentially expand future productive capacity.
First Capital’s figures therefore provide an indication of where bankable demand is currently strongest: established commercial activity and household cash flows appear easier to finance than longer-term productive investment.
First Capital’s portfolio differs from the wider banking sector
The shift also stands out against the broader banking system.
Zimbabwe’s banking sector reported 70.92% of lending to productive sectors at June 2026, with commercial activity accounting for 19.93%, agriculture 15.57%, manufacturing 12.96% and mining 7.35%. Approximately 90% of the sector’s loan book remained denominated in foreign currency.
First Capital’s portfolio has a somewhat different profile.
Its trade and services exposure of 24% is higher than the system-wide commercial lending allocation on a broadly comparable basis, while agriculture at 11% is below the sector’s 15.57%.
Its light and heavy industry exposure of 12% is relatively close to the banking industry’s manufacturing allocation, but energy and minerals account for only about 1% of First Capital’s book despite mining’s importance to Zimbabwe’s foreign-currency generation.
For The Zimbabwe Financial Mail, this divergence is significant because it highlights the difference between deploying capital where demand is readily available and deliberately financing sectors that require longer-term investment.
A bank’s portfolio ultimately reflects risk appetite, collateral availability, pricing, repayment capacity and the tenor it is prepared to assume.
Rising non-performing loans remain a concern
The rapid expansion of trade lending also needs to be viewed alongside asset quality.
First Capital’s non-performing loans increased from US$6.86 million at December 2025 to US$7.52 million at June 2026.
The composition of problem loans is particularly noteworthy.
Light and heavy industry accounted for US$3.10 million, trade and services US$2.47 million and physical persons US$1.96 million. Agriculture, transport, energy and minerals and financial services recorded no non-performing balances in the disclosed figures.
Trade and services therefore received US$23.52 million of new lending during the first half while its non-performing loan balance remained at US$2.47 million.
The expansion of the underlying portfolio has nevertheless reduced the segment’s NPL ratio. Its US$2.47 million of problem loans represented roughly 6.1% of the US$40.17 million exposure at June, compared with almost 15% when the same NPL balance was measured against the smaller US$16.64 million portfolio at December.
The bank’s overall NPL ratio similarly improved from approximately 5.2% to 4.5%, even though the absolute value of non-performing loans increased.
That distinction is important. A falling NPL ratio represents an improvement in portfolio quality relative to the size of the book, but it does not mean the absolute stock of problem loans has declined.
Industry lending remains the most pronounced concentration of credit risk. Its US$3.10 million of non-performing loans were equivalent to roughly 15% of its US$20.24 million exposure and accounted for more than 40% of First Capital’s total disclosed NPLs.
Agriculture, by contrast, had US$19.11 million in outstanding loans but no reported non-performing exposure at June.
Growth in profits comes with a future credit-risk test
First Capital’s first-half performance also benefited from a sharp reduction in credit-loss expenses.
Credit losses recognised through profit fell from US$2.90 million to US$355,000.
That provided an important boost to earnings at a time when the bank’s loan book was expanding rapidly.
The Zimbabwe Financial Mail said the combination creates a point that investors will need to watch closely during the second half: interest income from new lending is recognised relatively quickly, while credit deterioration can emerge later as loans season and borrowers encounter repayment pressure.
The sustainability of the bank’s earnings growth will therefore depend not simply on how rapidly it can expand lending, but on whether the new loans continue performing through their full credit cycles.
A more commercially oriented balance sheet
First Capital entered the second half with a growing funding base, strong liquidity and a reported capital adequacy ratio of about 27%.
The immediate challenge is consequently less about finding deposits and more about deploying those funds into assets that generate attractive risk-adjusted returns.
The H1 lending pattern suggests that management has found the strongest immediate demand in trade and services.
That strategy can be commercially effective if borrowers generate reliable cash flows, repay on schedule and deepen their wider banking relationships.
But the concentration also means that First Capital’s fortunes will increasingly be tied to the quality of Zimbabwe’s commercial economy.
As Equity Axis puts it, the most revealing statistic is not simply the bank’s 28% loan growth. It is the destination of that growth: almost two-thirds of the US$36.6 million in new lending went into trade and services.
For The Zimbabwe Financial Mail, that makes First Capital’s first-half balance sheet both a story of successful deposit mobilisation and a test of whether Zimbabwe’s banks are increasingly financing commerce and consumption rather than the longer-term productive investment needed to expand the economy’s underlying capacity.
The second half of 2026 will therefore show whether First Capital’s aggressive deployment of liquidity can translate into durable earnings without a corresponding acceleration in credit losses.
