OPERATING ENVIRONMENT
The Reserve Bank of Zimbabwe (RBZ) maintained a tight monetary policy stance during Q1 2026 with the bank policy rate remaining at 35%. Reserve requirements remained relatively high at 30% for demand deposits and 15% for savings and time deposits respectively. The liquidity management tools have been kept constant to support the stability of the Zimbabwe Gold (ZWG) currency. The high Bank Policy rate is intended to curb inflationary pressures although it has raised concerns regarding subsequent high borrowing costs for industry and commerce. These measures together with other liquidity management tools helped to limit month-on-month price pressure as single digit inflation figures for both ZWG and USD denominations were recorded for the quarter. The proportion of USD deposits in the banking sector increased in 2026 with USD deposits at approximately 86.4% compared to 85.3% as at 31 December 2025. This underlined the dominance of the USD despite lower local currency headline inflation and increased efforts by the RBZ to promote the use of the ZWG.
FMHL recognises the efforts by the Government of Zimbabwe to improve the ease of doing business environment through comprehensive reviews of existing taxes, business fees and licensing requirements. The agricultural and mining sectors were leading contributors to Gross Domestic Product (GDP) growth in 2025 with the expectation of continued improvement throughout 2026. However, downside risks to GDP growth have emerged in the first quarter of 2026 primarily driven by the ongoing conflict in the Middle East. This geopolitical instability has fueled a surge in global oil prices exerting significant inflationary pressure on energy costs and disrupting international supply chains. This has resulted in a slight rise in inflation pressures in both USD and ZWG terms. The cost of business reforms which include but are not limited to lower expected regulatory fees have drastically cut the burden of legislative costs in 2026 and the expectation is that these benefits will filter through to the rest of the economy including the financial services sector. While there may be a time-lag before these measures start to bear fruit, they are expected to have a positive impact on economic growth.
On the investment front, listed equity markets delivered positive returns in the first quarter of 2026. The ZSE All Share Index was up 29% and VFEX 41% in Q1 2026. This was buttressed by notable increases in trading value and liquidity on both bourses. Money market conditions remained tight as the RBZ policy stance made ZWG borrowing expensive and sustained demand for USD financing for Q1 2026. Reported money market quotes showed elevated ZWG lending rates with RBZ USD instruments yielding competitive real interest rate quotes (9% to 11%). The tight monetary stance has reduced speculative borrowing and supported exchange rate stability which has improved confidence in the financial services sector.
Should financial stability be sustained, a gradual decline in both USD and ZWG money market interest rates is expected, which would ease funding conditions and reduce the overall cost of funding to business over the medium term. The Group will continue to prioritise its real asset strategy as a prudent hedge against downside risks, while positioning for growth through the rollout of relevant and innovative products and service offerings.
BASIS OF PREPARATION
The Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements further comply with interpretations issued by the IFRS Interpretations Committee (IFRIC), as well as the requirements of the Zimbabwe Companies and Other Business Entities Act and the listing regulations of the Zimbabwe Stock Exchange.
OPERATIONS REVIEW
The Board of Directors of the Group hereby presents to the shareholders of the unaudited financial results for the period ended 31 March 2026.
The Group recorded consolidated shareholder revenue of $50.9 million, representing a 6% increase compared to $48.1 million in the prior comparative period. Growth was driven primarily by Insurance Contract Revenue, asset and project management fees, and the health services. Insurance contract revenue increased by 7% year-on-year, driven by continued growth in the in-force portfolio business. This performance underscores the resilience of our franchise, with customer demand for insurance products remaining strong despite a challenging macroeconomic environment. Asset and project management fees rose by 52%, driven by new mandate inflows, and improved fee generation from investment performance. The health services business recorded a 13% increase in revenue and benefitted from higher patient volumes. Rental income remained stable, increasing marginally by 1%, despite a decline in occupancy levels. Net interest and fee income declined by 29%, largely due to lower yields on interest-bearing assets.
The Group delivered a significant improvement in profitability, with profit before tax increasing by 96% to $6.3 million and profit after tax rising by 137% to $5.6 million. The improved performance was largely driven by strong investment returns from equities listed on the VFEX and ZSE, which rebounded sharply compared to the prior comparative period loss.
Outlook
The Board remains confident that the Group’s diversified business model is well positioned to navigate current market conditions while delivering shareholder value. This confidence is supported by disciplined underwriting, revenue diversification, and growth in fee-based income.
The listing on the VFEX of the First Mutual Wealth Gold Exchange Traded Fund product on 8 May 2026 demonstrated our commitment to developing innovative products that meet market requirements and strengthened the Group’s investment offering. Continuous investment in digital transformation and operational efficiencies supports sustainable long-term growth.
A notice to shareholders regarding the offer by First Mutual Holdings Limited to the First Mutual Properties (FMP) minority shareholders preceding the voluntary termination of the listing of FMP on the ZSE was published on 11 May 2026. If the proposed transaction is approved by FMP shareholders, the company will have greater flexibility to raise capital through private placements, asset-level funding, development joint ventures, and other bespoke financing structures better aligned with project timelines and risk profiles.
By order of the Board
Sheila Lorimer
Company Secretary
