Zaymer MFC: Net interest margin declines, yet dividend yield stays double-digit

On August 25, Zaymer MFC released its condensed consolidated interim financial statements for H1 2026. Net interest income for the half-year fell 12.2% year-on-year to RUB 9,057.2 million, while net profit dropped 50.5% to RUB 920.5 million. This review covers the reasons behind the margin decline, the state of the loan portfolio, and the sustainability of dividend payments.

Key takeaways

— Net interest income for the half-year fell 12.2% due to lower lending volumes and higher funding costs

— Net profit for the half-year dropped 50.5%, pressured by provisions, higher operating expenses, and a loss on portfolio sale

— Return on equity declined to 14.0% amid falling profit and rising capital

— Dividend yield for the trailing 12 months stood at 20.1%, well above the market average

— The loan portfolio is shrinking: carrying value fell 6.7% in the half-year, asset quality deteriorated

— Fee and commission income rose 72.5% in the half-year but did not offset the decline in interest income

— Investments in joint ventures and associates increased the balance sheet but are not yet profitable

Key figures, RUB bn

Net interest income for the half-year fell 12.2% due to lower lending volumes and higher funding costs

For H1 2026, net interest income amounted to RUB 9,057.2 million, down 12.2% from the same period last year. Interest income calculated using the effective interest method fell 12.2% to RUB 9,080.4 million, while interest expenses more than doubled to RUB 49.9 million. The main reason was a decline in the average monthly principal balance of loans: for the six months of 2026 it was RUB 18,330.6 million versus RUB 21,155.9 million a year earlier.

In Q2 2026, net interest income fell 15.0% year-on-year to RUB 4,512.4 million, worsening from the 9.3% decline in Q1. Thus, the pace of decline is accelerating, reflecting both portfolio contraction and pressure on rates.

Net profit for the half-year dropped 50.5%, pressured by provisions, higher operating expenses, and a loss on portfolio sale

Net profit for H1 2026 was RUB 920.5 million, almost half the RUB 1,861.1 million a year earlier. Key factors included: an increase in the allowance for credit losses (although it decreased from RUB 4,459.2 million to RUB 3,727.2 million), a 21.3% rise in general administrative expenses to RUB 4,528.7 million, and a loss on sale of the loan portfolio of RUB 350.1 million versus RUB 317.5 million a year earlier.

In Q2 2026, net profit fell 48.8% year-on-year to RUB 483.8 million, in line with the half-year trend. Net margin for the quarter was 10.7% versus 17.8% a year earlier.

Return on equity declined to 14.0% amid falling profit and rising capital

Return on equity (ROE) for the trailing twelve months was 14.0%, noticeably below levels typical for the microfinance sector. The reason is a combination of lower net profit and higher capital: in H1 2026, retained earnings increased by RUB 922.5 million, but dividends of RUB 1,546.0 million were also declared, which curbs capital accumulation.

Nevertheless, even with the decline, ROE remains above the cost of equity for most investors, supporting the investment appeal of the stock.

Dividend yield for the trailing 12 months stood at 20.1%, well above the market average

Over the trailing 12 months, the company paid dividends of RUB 27.07 per share, providing a yield of 20.1% at the current market capitalization of RUB 13,535 million. Our model estimate suggests a similar payout in the next period, implying a forward yield of 20.2%.

The fair yield for this issuer, in our view, is 12.8%, meaning the current yield is significantly above the required level. This indicates that the market is pricing in substantial risks related to falling profit and portfolio quality.

The loan portfolio is shrinking: carrying value fell 6.7% in the half-year, asset quality deteriorated

The carrying value of loans to customers measured at amortized cost as of June 30, 2026 was RUB 11,301.8 million, down 6.7% from the end of 2025 (RUB 12,108.7 million). Gross portfolio value decreased from RUB 33,706.1 million to RUB 31,265.6 million, and the number of borrowers fell from 1,815,138 to 1,641,793.

Portfolio quality deteriorated: the share of defaulted loans (Stage 3) rose from 79.5% to 80.2% of gross value, while the provision coverage for defaulted loans declined from 75.96% to 74.90%. This suggests the company is writing off bad debts more actively, but new problem loans continue to accumulate.

Fee and commission income rose 72.5% in the half-year but did not offset the decline in interest income

Fee and commission income for H1 2026 was RUB 1,377.4 million, up 72.5% from RUB 798.6 million a year earlier. The growth was mainly driven by fee income (RUB 1,032.1 million) and fees for payments and transfers (RUB 264.4 million), which emerged after the acquisition of payment services.

However, this growth only partially offsets the decline in net interest income: the absolute increase in fee income was RUB 578.8 million, while the decline in net interest income reached RUB 1,262.0 million. As a result, total revenue (interest and fee income) continues to decline.

Investments in joint ventures and associates increased the balance sheet but are not yet profitable

In H1 2026, the company acquired 50% stakes in three joint ventures: Best LLC (payment system), Intellect Money LLC (online payment platform), and Qiwi Technology LLC (Taxi aggregator service). The total carrying value of these investments was RUB 926.8 million, significantly increasing long-term assets.

However, the share of results from associates and joint ventures for the half-year was negative – minus RUB 28.8 million versus plus RUB 15.9 million a year earlier. This means the new acquisitions are currently loss-making and do not create shareholder value, although they expand the company's ecosystem.

Valuation on the latest reported figures

Bottom line

The H1 2026 report shows a company in a contraction phase: net interest income is falling at double-digit rates, the portfolio is shrinking, and asset quality is deteriorating. Growth in fee income and ecosystem expansion are positive steps, but they do not yet offset the key losses. The company's main asset remains its high dividend yield, but it is supported by past results rather than current earnings. For shareholders, the key question is whether the company can stabilize its portfolio and restore profitability, or whether dividends will have to be cut.