Kenya's Tier-1 Banks Post Five Straight Profitable Years

Not a single tier-1 Kenyan bank recorded an annual net loss in the five years through 2025, according to TechCabal's review of five years of audited reports. Combined pre-tax profits rose 18.6% in 2023 to KES 260.09 billion ($2 billion) in 2024, then grew another 17.6% to KES 305.95 billion ($2.36 billion) in 2025.

Lending is supposed to be a business built on the risk that someone won't pay back. A borrower defaults, a harvest fails, a currency slides. Yet Kenya's largest commercial banks look insulated from the conditions their borrowers face — profits keep compounding while households and businesses struggle.

NCBA Group shows just how good the run has been. Its profit after tax grew 409% from 2020 to KES 23.4 billion ($180.1 million) in 2025, per its 2025 integrated report. Dividend payouts rose 368% over the same period to KES 11.7 billion ($90.1 million).

Why aren't the banks lending more?

Record profits don't mean banks have stopped lending — but they have good reasons to be cautious. A business with irregular sales, incomplete accounts and no property to pledge is harder to assess than a government bond. Recovering a bad loan can take years, with legal and administrative costs eating into whatever a bank claws back.

A 2026 Kenya Bankers Association working paper, drawing on the 2018 World Bank Enterprise Survey, puts the bottleneck in sharp focus:

• Roughly three-quarters of small businesses that might need financing never apply for bank loans — they expect rejection, can't meet collateral requirements, or find borrowing too expensive.
• Of those who do apply, more than 90% are approved.

The problem, in other words, is that potential borrowers never make it through the door.

Rising bad-loan costs reinforce the caution. The industry's non-performing loan ratio hit 16.4% in December 2024, according to the Kenya Bankers Association's State of the Banking Industry Report 2025. Government securities offer the easy alternative: by late 2024 they accounted for 27.8% of banking sector assets, while the loan-to-deposit ratio had fallen to 70.1%. Lending to the state beats assessing thousands of businesses with different cash flows and credit histories.

Giving out pocket change

While big lenders stepped back from underwriting local firms, they found an opening in consumer payments through partnerships with mobile telecom networks. Safaricom runs Fuliza, its overdraft facility, alongside NCBA and KCB, with Sidian Bank joining the product.

At its investor briefing in Nairobi on Thursday, Safaricom said Fuliza brought in KES 4.9 billion ($38 million) in revenue in the six months to September 2026, up 86% year on year. The overdraft now accounts for 71% of Safaricom's KES 7.0 billion ($54.3 million) credit portfolio revenue.

The scale is remarkable. Over those six months, Fuliza disbursed KES 1.16 trillion ($8.97 billion) — up 84% — and collected KES 1.15 trillion ($8.94 billion), a 99.6% recovery rate through automated wallet deductions. Its customer base grew 88.9% to 17.2 million borrowers. Yet the average advance fell 24.6% to KES 192 ($1.49), down from KES 254.60 ($1.97).

Fuliza works because it isn't a conventional loan: it's tied to M-PESA transactions, relies on automated deductions, and processes thousands of small advances through an existing payments network. That gives bank partners a way to assess and recover credit at a scale traditional loan applications can't match.

For larger sums, consumers turn to digital credit providers. In the six months to June 2026, DCPs lent KES 43.7 billion ($336.4 million), pushing their outstanding loan book to KES 153.8 billion ($1.18 billion) — a 39.6% jump from December 2025. Kenya now has 281 licensed digital lenders serving 8.9 million customers, with average loans of KES 17,280 ($133.02) on one-week to two-month terms.

The cost is steep: daily rates around 0.6%, roughly 24% a month. And according to the Central Bank of Kenya, 45% of users borrow to stock shops, 37% pay school fees, and 23% purchase food. FinAccess survey data shows 16.6% of Kenyan households face debt distress, up from 10.3% in 2021.

The business of managing risk

Banks haven't abandoned businesses entirely. In 2025 they disbursed KES 326.5 billion ($2.5 billion) to micro, small and medium enterprises, with more than 73% of outstanding loans issued without collateral, according to the Kenya Bankers Association. Access remains uneven: women-led businesses made up 46% of MSME borrowers but received just 25% of outstanding credit.

What does this change for practitioners? The profit engine has shifted from underwriting firms to payments-embedded micro-credit and government paper — and lenders who can't assess informal businesses without absorbing losses they can't carry will keep riding that model until something forces a rethink.