Equity leads as banks increase MSME lending to Ksh.424.67 billion

Data released by the Kenya Bankers Association (KBA) shows that Equity Bank accounted for the largest share of the lending, extending Ksh.127.95 billion to small businesses during the nine months.

The amount represented approximately 30.13 per cent of all new MSME credit issued by commercial banks, placing Equity ahead of Co-operative Bank, which lent Ksh.60.26 billion, and KCB Bank, which disbursed Ksh.41.10 billion.

Family Bank ranked fourth with Ksh.31.84 billion, followed by NCBA at Ksh.28.69 billion. Stanbic Bank advanced Ksh.25.93 billion, while Absa Bank Kenya and I&M Bank lent Ksh.21.20 billion and Ksh.20.39 billion, respectively.

Kingdom Bank and Diamond Trust Bank (DTB) completed the top 10, with disbursements of Ksh.15.90 billion and Ksh.14.34 billion, respectively.

The latest figures put the banking sector within reach of its Ksh.500 billion full-year MSME lending target, with three months remaining in 2026.

The growth in lending comes amid a gradual easing of borrowing costs, with average commercial bank lending rates falling to 14.4 per cent in September 2026, compared to 17.2 per cent in November 2024.

Private sector credit growth also improved to 10.6 per cent in September, up from 10.3 per cent in August, pointing to increased lending activity as borrowing conditions ease.

The banking sector has also recorded an improvement in loan repayment performance, with the gross non-performing loan ratio declining to 13.9 per cent in September from 14.8 per cent in June and 17.6 per cent in August 2025.

According to KBA, the decline points to improving debt servicing across the industry, alongside better cash flows among businesses as supply chain disruptions and inflationary pressures ease.