THE Central Africa Building Society (CABS) delivered stronger operational results in 2025, but a newly-imposed income tax on building societies cut into earnings, costing the lender US$15,11 million.
For the year ended December 31, 2025, the building society posted a 21,1% increase in profit before tax to US$38,59 million.
The growth was driven by a fair value adjustment gain of US$2,64 million and a recovery in investment-related income, which rebounded from a prior-year loss of US$6,54 million.
However, changes to the tax regime introduced at the beginning of 2025 resulted in a substantial tax charge, reversing part of the gains.
“Effective January 1, 2025, the Society became liable for income tax following the amendment to Paragraph 2(c) of the Third Schedule of the Income Tax Act (Chapter 23:06),” CABS said in its financial statements.
“The amendment restricts the tax exemption to receipts and accruals from mortgage finance only. Consequently, all other taxable income streams are now subject to income tax in terms of the Income Tax Act.”
The change meant income outside mortgage financing became taxable.
“The introduction of income tax on building societies in 2025 had a significant impact on the bottom line, resulting in a tax charge of US$15,11 million, where no tax was previously applicable,” managing director Mehluli Mpofu said.
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“Consequently, surplus after tax declined to US$23,48 million from US$31,87 million in 2024.”
The new tax burden comes as CABS expanded its lending and development financing activities. The society secured credit lines from development partners including the African Export-Import Bank, the European Investment Bank and the Trade and Development Bank, closing the year with a total facility limit of US$162,7 million.
“In negotiating lines of credit, the society’s thrust is towards achieving the right price and tenor that support the growth and sustainability of local businesses,” Mpofu said.
These facilities helped drive lending, with loans rising to US$253,26 million from US$192,03 million in the prior year.
CABS also renewed its participation in a syndicated US$210 million facility to the Zimbabwe Electricity Transmission and Distribution Company to support power imports and distribution infrastructure.
“In addition, we have renewed our participation in the syndicated US$210 million facility to the Zimbabwe Electricity Transmission and Distribution Company (Private) Ltd to acquire essential power distribution equipment and importation of power,” Mpofu said.
The society further accessed the Reserve Bank of Zimbabwe’s Targeted Finance Facility.
“CABS participated in the Targeted Finance Facility (TFF) to the tune of ZiG60 million. This TFF sought to provide affordable working capital to productive sectors, aiming to support the targeted 6% economic growth for the year 2025,” he said.
CABS’ balance sheet strengthened during the period, with cash and cash equivalents rising 46,43% to US$202,72 million, supported by higher bank balances and gold-backed digital tokens. Total assets grew nearly 27% to US$632,4 million.
