Kenya's banking sector records growth as assets rise to Ksh.8.35 trillion

According to the Kenya Bankers Association's State of the Banking Industry Report, total banking sector assets increased by 10.3 per cent to Ksh.8.35 trillion, reversing the 1.6 per cent contraction recorded in the previous year.

The recovery was accompanied by broad-based growth across all bank tiers.

Customer deposits rose by 9.9 per cent to Ksh.6.38 trillion, pointing to continued public confidence in the banking sector.

Tier One banks remained dominant, accounting for 75.4 per cent of total industry deposits. However, small banks recorded the fastest deposit growth at 22.3 per cent, increasing their market share from 7.1 per cent to 7.9 per cent.

Net loans and advances also recovered, growing by 6.9 per cent to Ksh.4.35 trillion in 2025.

The sector's stock of bad debt declined to 14.7 per cent in 2025, down from 16 per cent in 2024.

Despite the improvement, banks continued to strengthen their buffers against potential loan defaults. Loan loss provisions increased by 16.5 per cent to Ksh.97.87 billion as lenders remained cautious over customers' ability to repay loans.

The report cited weak repayment capacity, inadequate access to collateral, poor credit scores, insufficient documentation and higher risk perceptions among the factors affecting access to credit.

Dr. Samuel Tiriongo, the Kenya Bankers Association's Director of Research and Policy, said banks are increasingly identifying opportunities in sustainable finance and green investments.

"Banks are building targets, identifying opportunities and being able to pursue those opportunities in their investments because each bank is now trying to put in targets for sustainable finance, really ensuring there is the greening of portfolios. Things like renewable energy are key," Tiriongo stated.