Kenyan Banks Sustain Profit Growth as Business Lending Remains Challenging

Kenya’s largest commercial banks have maintained profitability even as households and businesses face tighter access to conventional credit, according to a review of audited lender reports.

The review found that none of the tier-one banks examined recorded an annual net loss during the five-year period covered. Combined pre-tax profits increased by 18.6% between 2023 and 2024 to KES 260.09 billion, before rising another 17.6% to KES 305.95 billion in 2025.

NCBA Group was among the lenders recording a significant increase over the period. Its profit after tax rose 409% from 2020 to KES 23.4 billion in 2025, while dividend payments increased 368% to KES 11.7 billion, according to the report.

Credit risks remain a challenge

The strong earnings came as banks continued to face difficulties assessing borrowers, recovering unpaid loans and managing non-performing credit. Businesses with irregular sales, incomplete financial records or limited collateral can be harder for lenders to evaluate, while loan recovery may involve lengthy legal and administrative processes.

The Kenya Bankers Association reported that the sector’s non-performing-loan ratio reached 16.4% in December 2024. A working paper from the association, using data from the 2018 World Bank Enterprise Survey, said roughly three-quarters of small businesses that may need financing never apply for bank loans. Among those that do apply, more than 90% are approved.

The figures suggest that limited borrowing is not explained only by rejection. The report also describes lending as exposed to borrower defaults, failed harvests and changes in currency values, all of which can increase the risks associated with business finance.

Banks turn to other channels

Government securities accounted for 27.8% of banking-sector assets by late 2024, while the sector’s loan-to-deposit ratio stood at 70.1%. These figures were presented in the report’s discussion of alternatives available to banks when traditional business lending is difficult.

Mobile-based credit has also become a major part of Kenya’s financial system. Safaricom operates the Fuliza overdraft service with NCBA and KCB, while Sidian Bank was reported as joining the product.

Safaricom said Fuliza generated KES 4.9 billion in revenue during the six months to September 2026, an 86% year-on-year increase. The service accounted for 71% of the company’s KES 7.0 billion in credit-portfolio revenue during the period.

Fuliza disbursed KES 1.16 trillion and collected KES 1.15 trillion over the six months, with its customer base reaching 17.2 million borrowers. The reported recovery rate was 99.6% through automated deductions from customers’ mobile wallets. At the same time, the average advance declined to KES 192 from KES 254.60.

Digital credit providers issued KES 43.7 billion in loans during the six months to June 2026, taking their total outstanding loan book to KES 153.8 billion. The Central Bank of Kenya reported that 281 licensed digital lenders were serving 8.9 million customers.

According to the central bank, digital borrowers used the loans for purposes including shop stock, school fees and food purchases. The report put the average digital-credit loan at KES 17,280, with some facilities charging approximately 0.6% per day. FinAccess reported that the share of Kenyan households facing debt distress rose to 16.6%, from 10.3% in 2021.

MSME lending continues

Despite uneven access, Kenyan banks continued to provide financing to micro, small and medium enterprises. They disbursed KES 326.5 billion to MSMEs in 2025, and more than 73% of outstanding MSME loans were issued without collateral.

Access remains unequal among borrowers. The Kenya Bankers Association said women-led businesses made up 46% of MSME borrowers but received 25% of outstanding MSME credit.

The figures point to a banking sector that remains profitable while traditional business finance carries significant risks and access gaps. Alongside lending to enterprises, banks and their partners are serving demand through government securities, mobile overdrafts and digital credit services.