Nedbank’s planned R13.9 billion acquisition of a controlling stake in Kenya’s NCBA Group marks a shift from a minority investment model to majority control in an East African country.
Speaking to Moneyweb after the group’s full-year results posting on Tuesday, chief financial officer Mike Davis said the bank is comfortable with the price paid for the Kenyan lender.
Read:
Nedbank resets Africa strategy as Ecobank sale trims earnings
Nedbank’s East Africa push comes at a premium with NCBA purchase
Nedbank shares closed 3.17% lower on Tuesday, at R298.33, mirroring declines seen across the banking sector.
“We believe we paid full value for the asset,” says Davis.
“You would have heard us speak in the past about having an intent or an interest to expand our operation in East Africa.
“Assets of NCBA’s quality seldom become available. So when the deal came up, we were extremely interested.”
He describes NCBA as “an extremely well-run bank” and “one of the top-tier one banks in the Kenyan market, stretching into Uganda, Rwanda, Tanzania, with most of its presence in Kenya”.
“We certainly think it’s an asset worth paying for.”
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Davis’s comments follow questions from some analysts about whether Nedbank paid a premium for the business, with debate focusing on the price and capital allocation.
Analyst views
Craig Metherell, equity analyst at Denker Capital, notes that the move from a minority stake in Ecobank to a controlling stake in NCBA should strengthen Nedbank’s competitive position over the medium term.
“It offers a growth vector in the attractive East African market … and should offer synergies given Nedbank’s CIB [corporate and investment bank] capabilities along with their cross-border structuring expertise.”
Read: Nedbank launches R14bn bid for East African lender
Keagan Higgins, investment analyst at Anchor, says that if the NCBA acquisition proceeds as planned, it should improve capital efficiency and support group return on equity over time.
“The key determinant will be whether NCBA integration delivers sustainable operating leverage and CIB cross-sell without diluting risk standards. Strategically, we think the move makes sense.”
From Ecobank to NCBA
In the interview, Davis contrasted the proposed deal with Nedbank’s earlier 21% stake in Ecobank, which it disposed of in December 2025 for around R1.6 billion.
“The business case and the strategic rationale [for Ecobank] were very much around giving us high levels of exposure to the African continent, with effectively an organisation that had businesses at that stage in 36 jurisdictions,” he says.
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The investment was made when oil prices were high and Nigeria was performing strongly. Oil prices later fell sharply.
Read: Nedbank flags 20% earnings drop after Ecobank exit
“Since then, Nigeria has battled to recover, and that put pressure and strain on that particular investment, and their ability to pay dividends to their shareholders was obviously restricted as they deployed profits into the recapitalisation of that particular region.”
A key difference in the NCBA transaction, says Davis, is control.
“We had 21%. In other words, we didn’t buy a majority stake in Ecobank. And as a result, it’s very difficult to influence strategy.” By contrast, the NCBA deal would result in “a fully-fledged”, consolidated subsidiary.
“The business is very digitally focused and complementary to Nedbank,” says Davis.
Higgins says the change in structure is material.
“Instead of holding a diffuse interest across multiple markets … Nedbank should now be able to directly drive strategy, funding optimisation, product alignment and capital allocation. This is ultimately a trade from optionality to control.”
