National Bank of Kenya posted its strongest quarterly performance in years for Q1 2026, with profit after tax surging 275% year-on-year to KSh 1.03 billion from KSh 275.7 million in the same period last year. The results mark the first full quarter under Access Bank Plc ownership and signal that the turnaround plan put in place after the May 2025 acquisition is starting to deliver.

The jump came from a combination of lower credit costs, tighter expense control, and improved funding efficiency. It’s a sharp contrast to NBK’s position under KCB Group, where years of high non-performing loans and elevated operating costs weighed on earnings.

Cost discipline drives the turnaround

The most immediate change under Access Bank has been on the cost side. Operating expenses for Q1 2026 were held at KSh 2.1 billion, reflecting the cost rationalization that began in 2025. That discipline helped bring the cost-to-income ratio down to 77.5% for full-year 2025 from 91.7% a year earlier, and the momentum has carried into the new year.

Net interest income rose to KSh 2.84 billion from KSh 2.4 billion in Q1 2025, supported by better asset pricing and a 33.3% decline in interest expense. The elevated funding costs that squeezed margins in 2023 and 2024 have unwound, giving NBK more room to earn on its loan and securities book without relying on aggressive loan growth.

Non-interest income held steady at KSh 664.3 million, with fees and commissions providing stability even as competition in Kenya’s banking sector remains intense. The bank hasn’t pushed for rapid revenue expansion, choosing instead to focus on margin quality and risk management.

Credit quality improvement changes the profit equation

The biggest swing in the income statement came from loan loss provisions, which dropped 92% year-on-year to KSh 50 million. That compares to KSh 618 million in Q1 2025 and reflects both better recoveries and a cleaner loan book. Gross non-performing loans had already halved to KSh 15.66 billion by December 2025, the lowest level since 2022, after Access Bank began a deliberate portfolio rationalization process.

Under the new ownership, NBK cut net loans by 32.3% in 2025 to KSh 50.71 billion, a KSh 24.16 billion contraction that was the sharpest single-year decline in the bank’s recorded history. The capital freed from lending was redeployed into government securities, which rose to KSh 59.93 billion, and balances with the Central Bank of Kenya. That shift reduced credit risk and boosted liquidity, with the liquidity ratio reaching 65.3% - more than three times the 20% statutory minimum.

Customer deposits grew 7.8% to KSh 106.17 billion in 2025, showing that the balance sheet contraction didn’t come at the expense of franchise value. Earnings per share more than doubled to KSh 0.88 from KSh 0.39, giving shareholders a clearer picture of the recovery underway.

Access Bank’s East Africa play

Access Bank completed the KSh 13.2 billion acquisition of NBK from KCB Group on May 30, 2025, after receiving regulatory approvals in Kenya and Nigeria. The deal, priced at 1.25 times book value as of December 2023, was financed in part by a USD 89.5 million guarantee from Afreximbank.

For Access Bank, the acquisition is central to its expansion strategy in East Africa. Kenya sits at the heart of regional commerce and is a key corridor under the African Continental Free Trade Agreement. NBK brings a national branch network, government-linked client relationships, and a retail base that complements Access Bank Kenya’s existing operations.

The two banks are still operating independently pending full integration, but customers can already access a shared branch network. Access Bank has said it plans to merge the entities to create one of Kenya’s top banks by assets and reach. Roosevelt Ogbonna, Managing Director and CEO of Access Bank Plc, called the completion of the deal “a significant step in our drive towards unlocking the vast potential of East Africa’s financial landscape.”

Access Bank’s own growth trajectory supports that ambition. Between 2022 and 2024, the group grew total assets by 173% to ₦40.84 trillion, deposits by 183% to ₦31.83 trillion, and gross revenue by 248% to ₦4.81 trillion. Profit before tax rose 424% over the same period, showing the scale Access Bank has achieved in Nigeria and across its African subsidiaries.

Positioning for the next phase

NBK’s Q1 2026 results position it among the notable gainers in Kenya’s banking sector this year. The recovery is built on cost discipline and improved credit quality rather than rapid loan expansion, which makes it more sustainable if the bank can maintain asset quality as it resumes lending.

The high liquidity ratio suggests NBK is not yet redeploying deposits into loans at scale, but that caution reflects the lessons of the previous credit cycle. As the integration with Access Bank Kenya progresses, the combined entity will have a stronger platform to serve individuals, SMEs, and government institutions across Kenya.

The broader Kenyan banking sector has shown recovery trends in 2026, with lower impairment charges and more stable funding costs supporting earnings. NBK’s performance reflects that environment, but the turnaround is also tied directly to the operational changes introduced by Access Bank.