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NCBA Q1 net profit up 3.4pc to Sh5.4bn on reduced tax cost
John Gachora, NCBA Group Managing Director and CEO, gives remarks during the release of the first half of the 2024 financial results at Fairmont Norfolk Hotel Nairobi on August 22, 2024.
NCBA Group’s net profit for the three months ended March 2025 rose by 3.4 percent to Sh5.48 billion, helped by a rise in net interest income and reduced tax expense.
The growth in net earnings was from Sh5.3 billion, posted in the previous similar quarter. The growth in profit came in the period net interest income grew by 20.6 percent to Sh9.97 billion from Sh8.26 billion.
The review period saw NCBA's current and deferred tax amount to Sh1.35 billion, marking a 30 percent decline from Sh1.93 billion in the prior period despite the pre-tax earnings growing to Sh6.83 billion from Sh6.54 billion.
The reduced tax spending supported the growth in the bottom line despite non-interest income dropping by 4.5 percent to Sh7.36 billion and operating expenses rising by 11.2 percent to Sh10.5 billion.
"Despite the headwinds of 2025, we are pleased to present these positive results in the first quarter of 2025. The profitability performance demonstrates, underlying resilience in our core income streams, while strong recovery efforts improved our asset quality," said John Gachora, Managing Director at NCBA.
The performance is coming in an environment of falling interest rates on loans in line with a sustained decline in the Central Bank Rate. Returns on government paper have also been declining even as foreign exchange income softened in an environment of reduced volatility on the shillings' exchange rate.
Other tier I lenders, including Co-operative Bank of Kenya and KCB Group, have seen single-digit profit growth while the likes of Stanbic Bank of Kenya and Standard Chartered Bank of Kenya posted a decline in the bottom line.
During the review period, NCBA increased the provisioning for non-performing loans (NPLs) by 20.3 percent to Sh1.62 billion from Sh1.35 billion while staff costs rose by 13.4 percent to Sh3.69 billion.
NCBA's customer deposits dropped to Sh495.67 billion at the end of March compared with December's Sh502 billion while the loan book shrank to Sh287.01 billion from Sh302.07 billion, leading to a drop in the asset base.
"The contraction in customer deposits and assets was driven by strategic initiatives focused on optimising funding costs and enhancing asset allocation efficiency," said Mr Gachora.
NCBA said the main subsidiary, NCBA Bank Kenya, contributed 79 per cent of the group's Sh6.8 billion profit before tax. The regional banking subsidiaries delivered Sh1.1 billion pre-tax profit, contributing about 16 percent of the group's overall profitability. The non-banking subsidiaries delivered a consolidated positive profit of Sh328 million or five per cent share in total profits.
The listed firm has hired a former executive of HSBC, James Gossip, as the managing director of NCBA Bank Kenya effective May 12, 2025.
Mr John Gachora will continue to serve as the group's chief executive.
NCBA said the appointment aligns with its long-term growth strategy that seeks to establish independent management of its different subsidiaries to boost governance in the conglomerate, which now operates in five countries in the region.
"It marks a significant step in advancing the bank's long-term growth agenda by reinforcing its commitment to strong, independent leadership and sound governance structures," said Group Company Secretary Kathryne Maundu in the notice.
Mr Gossip is a seasoned banker with more than 30 years of experience in international banking, having held senior leadership roles in Europe, Asia, and North America. This is the first time he will be leading a bank in Africa.
