Thursday, July 25, 2024

NCBA Group: Inside look at growth and success of one of Kenya’s largest banks

When all Kenyan banks released their 2023 financial results in March this year, one bank stood out from the rest. This bank was the NCBA Group. The bank had the largest growth in net profit in Kenya. Its full year net profit for 2023 grew by an incredible 56 per cent.

An analysis of all banking data in Kenya by Bizna Kenya shows that NCBA’s performance was the largest growth margin among all listed banks. The second closest performance came in at 34.2 per cent, nearly half of the profit growth margin made by the NCBA Group.

The 56 per cent growth in the bank’s profitability translated to a net of Sh. 21.5 billion. In the previous year, the bank had returned a net of Sh. 13.7 billion.

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This strong performance was sweet music to the ears of Kenyans who have invested in the NCBA Group shares. The bank recommended a final dividend payment of Sh. 3 per share. This brought the total dividend for the year 2023 to Sh. 4.75 per share which was equivalent to a record dividend payment of Sh. 7.8 billion. NCBA’s shareholders took home Sh. 800 million more in dividends compared to the previous year when Sh. 7 billion was paid out as dividends.

How did this performance come to be? According to John Gachora, the NCBA Group Managing Director and Chief Executive Officer, the bank has reinvented itself to become a sustainable, customer-solutions oriented banking hub. “At the heart of our success lies a clear strategy that guides our decisions and actions towards creating a sustainable and profitable business model,” he says.

This has led the bank to not only enhance its digital products but also expand its physical presence across the country. For instance, in 2023, the NCBA Group opened 8 new branches to take its total branch network to 92 branches spread across 26 counties.


This paid off, with Uganda, Tanzania and Rwanda subsidiaries collectively delivering a profit before tax of Sh. 3 billion, a major improvement from the loss of Sh. 308 million the subsidiaries had collectively posted in the full year 2022.

In the same vein, across its regional network, the bank opened new branches in Rwanda and Uganda to take its total Group footprint to an extensive branch network of 109 branches in the region.

“We further brought our services closer to our customers by rolling out an agency banking program which on-boarded an additional 476 agents across all 47 counties in Kenya,” says Mr. Gachora.


These efforts bore fruits. Very succulent fruits, with customer deposits in the 2023 financial year increasing by 15.3 per cent to Sh. 579 billion. In 2023 we maintained our position as the number two Corporate Bank in East Africa with a substantial deposit base of Sh. 253 billion and grew cross border corporate relationships across the region by 29 per cent,” adds Mr. Gachora.

At the same time, the Group’s assets grew by 19 per cent to Sh. 734.6 billion, with projections indicating that the Group will cross the three-quarter mark towards the Sh. 1 trillion assets mark this year.

According to Dominic Nyamai, a financial markets and investments analyst, the growth of the NCBA Group is also reflected in its digital lending footprint. “This has been a real trailblazer. The NCBA’s mobile lending platforms top the list of digital lenders in the country, with Sh. 930 billion having been disbursed by the Group in 2023 alone,” says Nyamai.

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This was a 27 per cent growth, with loans disbursed under Fuliza increasing by 27 per cent to Sh. 789.6 billion. Loans given under M-Shwari grew by 17 per cent to Sh. 102.4 billion while loans disbursed under Loop stood at Sh. 1.2 billion, which was a growth of 87 per cent.

“With a history spanning over 15 years, we have grown to service over 60 million customers across 5 African markets of Kenya, Uganda, Tanzania, Rwanda and Ivory Coast,” says Eric Muriuki, the Group Director for Digital Business.

In the current financial year, the NCBA Group has shown signs of another impressive performance. In the first three months of 2024, the bank recorded a profit growth to Sh. 5.3 billion.

“Our diversified business model continues to demonstrate growth and resilience with a strong contribution from our digital business and stable performance from our regional banking subsidiaries,” says Mr. Gachora.

For instance, in this first 2024 quarter, regional subsidiaries in Uganda, Rwanda and Tanzania delivered a combined Sh. 705 million which represented 11 per cent of the Group’s pretax profit. “Throughout this year, we will continue to execute within the Group`s strategic framework cycle which is now in its final year,” says Mr. Gachora.

On the securities market, the NCBA Group stock remains highly attractive for investors looking for good dividend returns at a discounted share price.

“Investors would consider NCBA Group a triple play of a growth, dividend and value counter based on its digit, dividend yield, and its stock’s trading below its book value per share,” Robert Ochieng’, an investment and financial advisor at Abojani Investments, tells Bizna Kenya.

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