Kenya’s banking sector delivered a broadly strong set of first-quarter earnings as lenders benefited from high interest rates, resilient non-funded income and easing loan-loss pressures, although some foreign-owned banks reported weaker profits amid a tougher operating environment.
Equity Group Holdings, one of East Africa’s largest lenders by assets and regional footprint, posted the strongest absolute earnings among listed banks after net profit rose 24% to 19 billion Kenyan shillings ($147 million) in the three months ended March.
The performance cemented Equity’s lead over rival KCB Group, whose quarterly profit increased 10% to 18 billion shillings ($139 million), supported by higher interest income and contributions from regional subsidiaries.
Co-operative Bank of Kenya, which has increasingly benefited from retail and SME lending, reported a 21% jump in net profit to 8.4 billion shillings ($65 million), while NCBA Group, a major player in digital lending and corporate banking, recorded a 9% rise in profit to 6 billion shillings ($46 million).
Among mid-sized lenders, I&M Group posted a 19% increase in quarterly earnings to 5 billion shillings ($39 million), reflecting continued growth in regional operations and transaction banking income.
Stanbic Holdings, the Kenyan subsidiary of South Africa’s Standard Bank Group, reported a 5.5% increase in net profit to 3.5 billion shillings ($27 million), while Diamond Trust Bank posted a 7.7% rise to the same level.
Smaller lenders outperformed larger rivals in percentage growth, underscoring a recovery among tier-two banks that have spent the past two years tightening credit standards and restructuring loan books.
Family Bank posted the sharpest increase among the banks surveyed, with net profit surging 53% to 1.6 billion shillings ($12 million), while HF Group reported a 45% rise to 475 million shillings ($3.7 million).
Sidian Bank also reported improved profitability, with earnings climbing 9% to 607 million shillings ($4.7 million).
However, not all lenders benefited from the favorable rate environment.
Absa Bank Kenya reported a 14% decline in first-quarter profit to 5.3 billion shillings ($41 million), suggesting pressure on margins and operating costs despite strong interest rates.
Standard Chartered Kenya recorded the steepest drop among major banks, with net profit falling 26% to 3.5 billion shillings ($27 million), reflecting weaker income growth and a more cautious lending environment.
Kenyan banks have spent the past two years benefiting from elevated interest rates following aggressive monetary tightening by the central bank to curb inflation and stabilize the currency. The high-rate environment boosted returns on loans and government securities, helping lenders expand net interest margins.
At the same time, banks increased investments in Treasury bills and bonds, taking advantage of double-digit yields while limiting exposure to risky private-sector lending.
Analysts say the latest earnings also point to improving asset quality after a prolonged period of heavy provisioning for bad loans linked to high living costs, currency depreciation and slower economic growth.
Still, the sector faces emerging risks from softer private-sector credit growth, rising household debt burdens and pressure on borrowers as interest rates remain elevated despite signs of easing inflation.
The mixed earnings among foreign-owned lenders also suggest competition for quality borrowers is intensifying in Kenya’s crowded banking market, where digital lending, agency banking and mobile-money integration continue reshaping the industry.
The earnings underline the dominance of Kenya’s top-tier lenders, with Equity and KCB together accounting for roughly 40% of the combined profits reported by the banks listed.
The Kenyan shilling has stabilized over the past year after a sharp recovery from record lows in early 2024, easing pressure on banks with foreign currency obligations and improving investor confidence in the financial sector.
Stay ahead of the stories shaping our world. Subscribe to Impact Newswire for timely, curated insights on global tech, business, and innovation all in one place.
Dive deeper into the future with the Cause Effect 4.0 Podcast, where we explore the ideas, trends, and technologies driving the global AI conversation.
Got a story to share? Pitch it to us at info@impactnews-wire.com and reach the right audience worldwide
Faustine Ngila is the AI Editor at Impact Newswire, based in Nairobi, Kenya. He is an award-winning journalist specializing in artificial intelligence, blockchain, and emerging technologies.
He previously worked as a global technology reporter at Quartz in New York and Digital Frontier in London, where he covered innovation, startups, and the global digital economy.
With years of experience reporting on cutting-edge technologies, Faustine focuses on AI developments, industry trends, and the impact of technology on society.
Discover more from Impact Newswire
Subscribe to get the latest posts sent to your email.
That left the bank in an acute bind. MSRDC had been promised 6.01%. The bank could no longer deliver even 4.5% through any normal channel. The differential of 2.51 percentage points between what regular customers received (3.5%) and what MSRDC had been promised (6.01%) still needed to be paid somehow, to retain the deposits. What happened next transformed a regulatory breach into something that, if the vigilance report’s findings hold, amounts to a structured, management-sanctioned act of deception.