Retrenchment bill dents banks' earnings

ZIMBABWE'S banking sector spent more than US$50 million on retrenchment and restructuring costs in 2025, as major financial institutions accelerated staff rationalisation programmes aimed at cutting costs, automating operations and shifting towards digital banking models.

While retrenchments often highlight the hardships faced by workers who lose their livelihoods, the latest figures show companies themselves are also absorbing substantial financial shocks through severance payouts and restructuring expenses.

According to statistics from the Zimbabwe Banks and Allied Workers Union (ZIBAWU), at least 516 banking sector employees lost their jobs during the year.

CBZ Holdings accounted for the largest share of the retrenchments after cutting 347 jobs, followed by ZB Financial Holdings (ZBFHL) with 75 employees, while NMBZ Holdings and Nedbank Zimbabwe each retrenched 47 workers.

A senior CBZ executive, speaking on condition of anonymity, said restructuring exercises carry enormous financial implications for institutions.

"Restructuring costs should have been accrued for in FY2024, but the payments were made in the first quarter of 2025. A total of US$30.2 million was paid for this exercise," the executive said.

At ZB Financial Holdings, the rationalisation programme significantly affected profitability during the reporting period.

The group posted a profit after tax of ZWG0.679 billion compared to a restated ZWG1.042 billion recorded in 2024.

The decline was attributed to lower exchange gains following the stabilisation of the Zimbabwe Gold (ZWG) exchange rate, coupled with rising retrenchment-related costs.

ZBFHL chief executive officer Dr Shepherd Fungura said operating expenses surged to ZWG2.923 billion from ZWG1.813 billion due to the restructuring exercise.

"The group incurred rationalisation costs as it continued to optimise its staff complement. Cost savings are expected in the coming years as processes become fully automated," said Dr Fungura.

"The group's profit after tax closed at ZWG0.679 billion in 2025 from ZWG1.042 billion in 2024. The decline was mainly as a result of reduced exchange gains and increased operating costs arising from the staff rationalisation exercise."

The impact was also visible at ZB Bank Limited, the group's flagship banking subsidiary, where profit after tax declined sharply to ZWG0.433 billion from ZWG1.080 billion in the previous year.

Management attributed the drop to increased operating expenses linked to the restructuring programme.

NMBZ Holdings also faced significant pressure from restructuring costs as the institution intensified efforts to transition towards a digital and more efficient operating model.

NMBZ chief executive officer Mr Gerald Gore said the restructuring programme weighed heavily on short-term profitability.

"Restructuring expenses of ZWG127 million were incurred during the year, primarily related to a change in strategic focus towards a digital and more efficient operation. These costs include severance payments and other termination costs," he said.

"We expect these restructuring efforts to result in future cost savings and improved operational efficiency."

Mr Gore said the bank's broader performance remained resilient despite the impact of major non-recurring expenses that affected earnings during the reporting period.

"Notably, the group undertook a comprehensive staff rationalisation and restructuring exercise at a cost of ZWG127 million, which weighed on short-term profitability," he said.

"The restructuring programme was a deliberate strategic intervention aimed at streamlining operations, optimising our cost base, strengthening risk management and enhancing operational efficiency across the group."

"While the immediate financial effect has been adverse, the initiative is expected to deliver sustainable long-term benefits through improved productivity, stronger cost discipline and enhanced competitiveness."

NMBZ's earnings were further affected by a tax dispute arising from the disallowance of interest expenses by tax authorities in the calculation of taxable income.

The adjustment was retrospectively applied from 2019, resulting in additional tax charges of ZWG94.5 million in 2025 and ZWG43.7 million in 2024.

Although the relevant provision of the Income Tax Act has since been repealed with effect from 2026, the repeal applies prospectively.

Banking sector executives say despite the short-term pain caused by restructuring expenses, most institutions are betting that automation, digital transformation and leaner operating structures will improve efficiency, competitiveness and long-term profitability.