NCBA Raises Interim Dividend 50% After Record KSh 12.39Bn H1 Profit

NCBA Group PLC posted its highest-ever half-year profit as earnings rose 12.2% to KSh 12.39 Bn, supported by lower funding costs, a 20.4% increase in net interest income and continued expansion in lending and customer deposits.

• NCBA has raised its interim dividend by 50% to KSh 3.75 per share, after profit before tax increased 14.3% to KSh 15.49 Bn, while earnings per share rose to KSh 7.52 from KSh 6.71.
• The result marked the seventh consecutive increase in first-half profit since 2020, when the group reported KSh 2.63 Bn.
• The results come as Nedbank’s offer to acquire a 66% stake in NCBA moves toward completion after closing 121% oversubscribed, with valid acceptances covering 79.9% of issued shares.

The lender's operating income grew 15.1% to KSh 40.68 Bn, driven primarily by net interest income, which increased to KSh 25.10 Bn from KSh 20.85 Bn. Interest expense declined 12.8% to KSh 11.44 Bn despite an 11.0% increase in customer deposits, indicating that lower funding costs were central to the improvement in margins. 

Total interest income increased at a slower 7.6% to KSh 36.54 Bn, while non-interest income rose 7.6% to KSh 15.58 Bn. Net interest income accounted for 61.7% of operating income, up from 59.0% a year earlier, making the group’s revenue mix more dependent on interest-generating activities.

Operating costs excluding credit provisions increased 5.1% to KSh 19.50 Bn, substantially below income growth. This lifted pre-provision operating profit by about 26% and reduced the cost-to-income ratio to approximately 47.9% from 52.5%.

The main pressure came from credit costs. Loan-loss provisions rose 60.3% to KSh 5.17 Bn from KSh 3.23 Bn, absorbing almost a quarter of pre-provision profit. Gross non-performing loans increased 5.7% to KSh 40.31 Bn, although the rise remained below the 20.1% growth in net lending. Management placed the group’s NPL ratio at 10.5%, compared with 15.3% across Kenya’s banking industry.

Net loans and advances expanded to a record KSh 345.88 Bn, while deposits reached KSh 551.41 Bn. Total assets rose 11.5% to KSh 739.40 Bn. The loan-to-deposit ratio increased to 62.7% from 58.0%, reflecting faster deployment of deposits into lending. Government securities also increased 22.5% to KSh 220.64 Bn, equivalent to nearly 30% of group assets.