NCBA Group ratings upgraded after Nedbank acquisition in Kenya

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NCBA ratings upgraded after Nedbank acquisition

Highlights

Fitch upgraded NCBA Group PLC and NCBA Bank Kenya Plc to 'B' from 'B-' and national ratings to 'AAA(ken)' from 'AA(ken)', with a Stable Outlook after Nedbank's acquisition.
NCBA Bank held 7% of Kenya's domestic sector assets at end-2025, and Nedbank's 66% stake is expected to provide near-term competitive advantages.
NCBA Group's non-performing loan ratio rose slightly to 10.8% at end-H1 2026 from 10.4%, while FCC ratio eased to 23.4% but capital buffers remain robust.

Fitch ties upgrade to parent support

As reported by Fitch Ratings, NCBA Group PLC and NCBA Bank Kenya Plc have been upgraded to 'B' from 'B-' on their Long-Term Issuer Default Ratings, while their National Long-Term Ratings have been raised to 'AAA(ken)' from 'AA(ken)'. The ratings have been removed from Rating Watch Positive and now carry a Stable Outlook.

Fitch says the upgrade follows the acquisition of NCBA Group by South Africa-based Nedbank Group Limited and reflects its assessment of a limited but meaningful probability of extraordinary support from the new parent. The agency has assigned Shareholder Support Ratings of 'b' to both issuers, while affirming and withdrawing NCBA Group's and NCBA Bank's Government Support Ratings because those measures are no longer relevant after the takeover.

According to Fitch, NCBA Group's and NCBA Bank's long-term ratings are capped by Kenya's Country Ceiling of 'B', which captures transfer and convertibility risk. Their national scale ratings are the highest available on Kenya's domestic scale and also factor in the potential for support from Nedbank.

Capital, asset quality and market position

Fitch says Nedbank has a high propensity to support NCBA because the Kenyan lender is important to its African growth and diversification strategy, although NCBA's ability to use that support is constrained by country risk. NCBA Group's balance sheet is relatively small compared with Nedbank, at an estimated 6% of the South African bank's total assets.

NCBA Bank accounts for 85% of group assets at end-first half 2026, and Fitch equalises both the bank's and the holding company's viability ratings at 'b-' based on the group's consolidated profile. The agency says the lender held 7% of Kenya's domestic banking sector assets at end-2025 and expects Nedbank's 66% stake to provide competitive advantages in the near term.

On asset quality, Fitch says NCBA Group's non-performing loan ratio rises slightly to 10.8% at end-first half 2026 from 10.4% at end-2025, while loan loss allowance coverage stands at 67%. The agency expects the ratio to remain broadly stable in the near term as new bad loans are offset by loan growth, recoveries and write-offs.

Profitability remains strong, with operating returns on risk-weighted assets averaging 5.6% between 2022 and 2025, supported by a wide net interest margin and solid fee, commission and foreign-exchange income. Fitch says the group's FCC ratio eases to 23.4% at end-first half 2026 from 23.9% at end-2025, but capital buffers remain large and funding and liquidity stay healthy despite a deposit base with a relatively high share of price-sensitive term deposits.

In our earlier coverage of geopolitical tensions and elevated fiscal spending, we noted that a prolonged period of conflict-driven shocks and persistent budget expansion is increasing sovereign borrowing risks in a higher-rate environment. We also highlighted that emerging and frontier markets are particularly exposed because debt-servicing costs can rise faster than government revenues, worsening refinancing pressure and weighing on credit outlooks.

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