NCBA Group delivered its strongest net interest income since its 2019 merger, posting a first quarter profit after tax of KSh 6.0 billion for the three months to March 2026, up 8.8% from KSh 5.5 billion a year earlier.
The result arrived days before Nedbank Group Limited’s partial offer to acquire approximately 66% of NCBA’s issued shares opens on 28 May 2026.
Falling Deposit Costs Drive Income Growth
Interest expense has dropped 49% from a KSh 10.84 billion peak in Q1 2024, tracking ten consecutive Central Bank of Kenya rate cuts that steadily repriced the deposit base downward. Customer deposit costs fell 20% to KSh 5.26 billion in the quarter, even as the deposit book grew 9.8% to KSh 544.4 billion.
That combination powered net interest income up 22.0% to KSh 12.2 billion, the primary engine behind a 15.4% expansion in total operating income to KSh 20.0 billion. Net interest margin widened by 1.5 percentage points to 7.7%, while profit before tax climbed 8.8% to KSh 7.4 billion.
Kenya Leads, Regional Units Contribute
The Kenya bank carried the group. Its standalone profit before tax rose 20% to KSh 6.5 billion in the quarter. Regional operations across Uganda, Tanzania and Rwanda contributed a combined KSh 707 million, while non-banking subsidiaries including the investment bank, insurance and leasing units added KSh 641 million collectively.
Total assets crossed KSh 741 billion, up 13.0% year on year, supported by a 13.0% expansion in the loan book to KSh 324.4 billion and a 15.6% increase in government securities holdings to KSh 216.6 billion. Shareholders’ funds grew 14.7% to KSh 133.4 billion.
Q1 2026 Key Financial Summary
| Metric | Q1 2025 | Q1 2026 | Change |
|---|---|---|---|
| Net Interest Income (KSh bn) | 10.0 | 12.2 | +22.0% |
| Total Operating Income (KSh bn) | 17.3 | 20.0 | +15.4% |
| Total Operating Expenses (KSh bn) | 10.5 | 12.2 | +16.6% |
| Loan Loss Provisions (KSh bn) | 1.6 | 2.5 | +56.2% |
| Profit Before Tax (KSh bn) | 6.8 | 7.4 | +8.8% |
| Profit After Tax (KSh bn) | 5.5 | 6.0 | +8.8% |
| Core EPS (KSh) | 3.3 | 3.6 | +8.8% |
| Net Interest Margin | 6.3% | 7.7% | +1.5pp |
| Cost of Funds | 7.0% | 4.2% | -2.8pp |
| Gross NPL Ratio | 12.2% | 11.2% | -0.9pp |
| Loan to Deposit Ratio | 57.9% | 59.6% | +1.7pp |
| Total Assets (KSh bn) | 656.0 | 741.1 | +13.0% |
| Core Capital / Risk Weighted Assets | 21.5% | 21.7% | +0.2pp |
Credit Costs Rise as Provisions Jump
The quarter carried a heavier credit risk charge. Loan loss provisions jumped 56.2% to KSh 2.5 billion, a figure Group Managing Director John Gachora attributed to “a prudent approach to credit risk assessment given the heightened volatile operating environment.” Gross non-performing loans rose 3.9% to KSh 39.3 billion, a second consecutive quarterly increase after a brief improvement in 2025.
Asset quality nonetheless improved at the portfolio level. The gross NPL ratio fell 0.9 percentage points to 11.2%, as gross loan growth of 12.7% outpaced the rise in impaired loans. NPL coverage strengthened to 66.2% from 63.0% a year earlier.
Total operating expenses grew 16.6% to KSh 12.2 billion, marginally faster than income, nudging the cost to income ratio to 61.2% from 60.6% in Q1 2025. The direction warrants watching, though the underlying profitability remains intact. Excluding loan loss provisions, the cost to income ratio improved to 48.6% from 51.2%.
Digital and SME Operations Gain Ground
Operationally, 98% of all transactions processed digitally in the quarter. The CarDuka vehicle trading platform passed 7 million users, underpinning the group’s 32% market share in asset finance. NCBA also launched NCBA BOOSTA, a digitally accessible SME lending product with a KSh 35 million ceiling, targeting growth in the KSh 8.3 billion in MSME lending reported in the quarter. Assets under management at NCBA Investment Bank reached KSh 101.5 billion, with wealth customers exceeding 60,000.
The bank remained well capitalised. The core capital to risk weighted assets ratio stood at 21.7%, 11.2 percentage points above the statutory minimum of 10.5%. The total capital ratio came in at 21.8%, exceeding the 14.5% regulatory floor by 7.3 percentage points. The liquidity ratio of 63.9% stood 43.9 percentage points above the minimum requirement of 20.0%.
Nedbank Offer Sets Up a Landmark Transaction
The results arrive at a pivotal moment for NCBA’s ownership structure. Nedbank Group Limited’s partial pro rata offer to acquire approximately 66% of NCBA’s issued shares opens 28 May 2026 and closes 10 July 2026. Gachora confirmed the transaction “continues to progress in line with plan, with key deal milestones currently on track.” If completed, Nedbank would become the majority shareholder of one of East Africa’s largest banking groups by assets, while the remaining 34% stake would continue trading on the Nairobi Securities Exchange.
Analysts at Genghis Capital rate NCBA a buy with a target price of KSh 103.3, representing a 25.1% upside including an 8.0% dividend yield from the current price of KSh 88.25 as of 22 May 2026. The stock trades at a price to tangible book value of 1.2x and a price to earnings ratio of 6.2x, against an industry average of 1.1x and 5.7x respectively.
