National Bank of Kenya (NBK) net profit for the three months to March grew nearly quadrupled to Sh1 billion riding on cheaper cost of funds and lower provisioning for defaults.
The bank, which was acquired from KCB Group by Nigerian lender Access Bank last year, had reported a net profit of Sh275.6 million in a similar period last year.
NBK cut its loan loss provisions, booked as an expense, to Sh50 million from Sh617 million after slashing its bad debts by nearly half.
Its non-performing loans dropped to Sh17.5 billion from Sh32.2 billion which management has previously attributed to enhanced recoveries and cherry-picking quality assets at the time of buying the lender from KCB.
NBK's cost of funds declined 38.7 percent to Sh825 million from Sh1.34 billion despite an expansion of its deposit base signalling lower returns to customers in line with a declining interest rate environment.
Customer savings with the bank rose to Sh106.6 billion from Sh103.9 billion.
Interest income declined marginally, 2.2 percent, despite a 19.4 percent shrinkage in loan book, with KCB having retained some of the assets during the sale of the former subsidiary to Access Bank.
NBK was one of the banks in the country that was plagued by a large pile of bad loans, mostly due to a mix of mismanagement and political interference.
KCB acquired NBK in a rescue deal in 2019 in a share swap transaction that saw the National Treasury, the National Social Security Fund (NSSF) and other investors convert their holdings into shares of KCB.
NBK was undercapitalised and its acquisition by the stronger KCB was seen as a solution to its balance sheet problems.
NBK’s capital position has since improved to exceed the minimum statutory requirements following the decline in loan book accompanied with retention of profits.
Compliance with the statutory requirements gives the bank headroom to grow its business unlike a year ago when it was below the capital adequacy levels.
The bank’s accumulated losses are currently at Sh1.9 billion, down from Sh5.55 billion in March last year.
NBK was acquired by Access Group in a deal valued at Sh15.8 billion. The assets transferred to Access Bank were however valued at Sh12.6 billion with the Nigerian lender willing to pay a premium of Sh3.18 billion to set up shop in Kenya.
Access Bank however did not consolidate NBK in its results for the year ended December 2025 as it awaited final approvals from the Central Bank of Nigeria.
Access Bank first entered the Kenyan market in 2020 by acquiring Transnational Bank which is categorised as a small lender.
The Pan-African bank intends to merge the operations of NBK and Access Bank Kenya this year, after securing the approvals.
Access Bank Kenya did not receive additional funding from its parent firm despite its core capital being below the new statutory requirement of Sh3 billion at the end of 2025.
The Nigerian multinational said merging operations of the two subsidiaries will naturally lift the amalgamated business into compliance. Combining the banks will also boost their ability to compete in a market where lenders operating on a larger scale take most of the profits, boosted by higher margins.
