By Marshall Bwanya
HARARE — AFC Commercial Bank’s non-performing loans rose to 9.25% at the end of 2025, almost double the recommended banking sector threshold, raising concerns over the lender’s credit risk controls, Auditor-General Vimbai Chikwenhere has found.
Chikwenhere, however, issued an unmodified, or clean, opinion on the bank’s financial statements for the year ended December 31, 2025, saying they fairly presented its financial position and performance in accordance with International Financial Reporting Standards.
Her audit identified weaknesses in the bank’s loan management and invoicing controls.
“The Bank’s internal controls over loan management processes were not effective during the period,” Chikwenhere said in her report.
She noted that the 9.25% non-performing loan ratio exceeded the recommended maximum of 5% for the banking sector.
A high level of non-performing loans, she warned, could weaken the bank’s capital adequacy and liquidity position.
Chikwenhere recommended stronger credit risk assessments, improved borrower due diligence and enhanced loan monitoring systems to detect potential defaults earlier.
Management attributed the high non-performing loan ratio mainly to “a huge debt to one of our clients”, whose project had experienced operational challenges.
Chikwenhere also found that AFC Commercial Bank had failed to fiscalise some invoices issued for rental income to fellow subsidiaries and commission invoices issued to customers.
That was contrary to section 20(4) of the Value Added Tax Act, which requires tax invoices to be fiscalised, according to the audit report.
The failure exposed the bank to possible financial losses through fines and penalties.
Management said the finding had been noted for implementation.
Chikwenhere said AFC Commercial Bank had made some progress in addressing weaknesses raised in her 2023 and 2024 reports.
One previous finding relating to penalties had been resolved after the bank introduced an automated system to track the filing of regulatory returns.
Loan concentration risk, however, remained only partially addressed.
One of two debtors identified in the 2023 audit still owed a significant balance, according to Chikwenhere.
Asked for comment on the latest findings, AFC Commercial Bank managing director Kenneth Chitando declined to respond, saying he was on leave and preparing to leave the bank.
“Unfortunately I am unable to respond to your questions because I am currently on leave, and I am leaving the organization by the end of the month,” said Chitando.
The audit findings occurred during Chitando’s tenure as managing director, although he is due to leave the organisation at the end of August.
