How Cheaper Funding, A 20% Surge In Loans And A 50% Dividend Lift Are Rewriting NCBA Bank’s Earnings Story As The Nedbank Deal Approaches Its Decisive Phase
There are bank results that impress because the profit number is large, and there are bank results that matter because the machinery underneath the profit has changed. NCBA Group’s first-half 2026 numbers belong in the second category. The headline is clean enough: profit after tax rose 12.2% year on year to KES 12.39 billion, and earnings per share advanced to KES 7.52. Yet the more consequential story is not the KES 1.34 billion added to the bottom line. It is the way the bank generated that growth – through a materially cheaper funding base, wider interest margins, faster loan growth, stronger operating leverage, and a deliberately larger credit-loss buffer at a moment when the institution is also approaching a potentially transformative change in ownership.
At first glance, a 12.2% rise in earnings can look merely solid rather than spectacular. But that interpretation misses the force of the income statement. Interest income rose 7.6% to KES 36.54 billion while interest expense fell 12.8% to KES 11.44 billion. That combination lifted net interest income by 20.4% to KES 25.10 billion. In other words, the bank did not need explosive asset yields to grow its core banking spread; it benefited from the repricing of liabilities and from a much more favourable relationship between the yield earned on assets and the cost paid for funding. Standard Investment Bank estimates NCBA’s net interest margin at about 8.4% for the half, compared with about 7.3% a year earlier.
Figure 1. Quarterly income and earnings trajectory, KES bn. Source: NCBA company filing as presented by Standard Investment Bank; Soko Directory Research calculations.
The funding story is especially important because it explains why a relatively modest 7.6% rise in interest income translated into a much larger 20.4% rise in net interest income. Customer deposits expanded 11.0% to KES 551.41 billion, but the estimated weighted average rate paid on those deposits fell to about 4.1% from 4.8% in 1H25. Expenses on customer deposits consequently declined 11.3% to KES 10.9 billion. For a bank, that is powerful operating chemistry: the deposit franchise became larger while the average price of that funding moved lower. It gave NCBA room to grow lending even as lending rates themselves softened.
That is visible on the asset side. Net loans and advances climbed 20.1% year on year to KES 345.88 billion, a much faster pace than deposit growth and one of the clearest signals in the results that private-sector credit demand is beginning to recover. The estimated weighted average lending rate eased to about 12.9% from 13.4% a year earlier, consistent with the transition toward Central Bank Rate-linked pricing and the effect of rate cuts during the period. Loan interest income therefore grew only about 2.0%, but volume compensated for price. The balance sheet was doing more work even though each shilling of lending was, on average, earning a slightly lower rate.
NCBA did not depend on loans alone. Investment securities increased 19.8% to KES 259.29 billion and interest income from government securities rose 12.3% to KES 14.2 billion. Income from deposits and placements with banking institutions and other interest income rose 45.7% to roughly KES 2.0 billion. The result is a more diversified interest engine: loans are expanding, securities are contributing more income, and funding costs have fallen sharply enough to widen the spread between what the bank earns and what it pays.
Figure 2. Balance-sheet trajectory from 2Q25 to 2Q26. Source: NCBA company filing as presented by Standard Investment Bank.
The non-interest side of the business also grew, though not as quickly as the interest engine. Fees, foreign-exchange income and other income together reached about KES 15.58 billion, up 7.6% year on year. Fee and commission income rose 9.1% to KES 10.08 billion, including a 9.5% rise in fees and commissions on loans and advances to KES 6.8 billion. Foreign-exchange trading income increased 8.4% to KES 2.64 billion, while other income was almost flat at KES 2.87 billion. Because net interest income grew much faster, non-interest revenue’s share of total operating income eased to 38.3% from 41.0% a year earlier. That is not a collapse in diversification; it is principally a reflection of a much stronger interest-income contribution.
The scale of NCBA’s digital franchise remains difficult to ignore. Digital loan disbursements increased 26.9% to approximately KES 819 billion in the first half, while mobile banking accounted for 94% of transaction volumes. Those figures help explain why fees can keep growing without a comparable expansion in a traditional branch footprint. The bank’s digital platforms are not a side business attached to a conventional lender; they are part of the operating architecture through which NCBA reaches customers, originates credit and processes activity at mass scale.
That digital scale is also why technology expenditure deserves to be read as more than a cost line. Operating expenses excluding loan-loss provisions rose 5.1% to KES 19.51 billion.