Listed banks in our coverage delivered a strong performance in 1H26, driven by a 17.2% y/y surge in coverage net earnings (PAT including non-controlling interests) to KES 153.5bn, anchored by higher net interest income (+11.4% y/y to KES 304.6bn) and non-funded income (+17.2% y/y to KES 159.1bn).
Profitability was largely driven by an easing interest expense environment (coverage interest expenses down by 5.4% y/y), a sharp rebound in private sector credit demand (coverage gross loans surged by 15.7% y/y), a double digit expansion in non-funded income (coverage NFI up by 17.2% y/y further supported by regional subsidiary uplift), and improved overall asset quality (coverage average gross NPL ratio declined to c.10.7% vs c.12.9% in 1H25) on the back of lower interest rates, expansion in gross loans, the continued payment of pending bills by the Government, recovery efforts, cautious lending, rehabilitation, write-offs, as well as full and final settlements.
The Kenyan banking landscape is undergoing structural and regulatory shifts designed to bolster systemic stability, drive market innovation, and deepen regional footprint. In particular, the Central Bank of Kenya (CBK) recently published updated draft prudential guidelines and a Domestic Systemically Important Banks (D-SIBs) identification framework, which aims to strengthen the regulatory framework, enhance the resilience of the banking sector, and align the country’s supervisory framework with international standards and emerging best practices.
