Kenya’s banking sector closed 2025 on solid footing, with lenders posting a jump in profitability while maintaining capital and liquidity buffers well above regulatory minimums, according to the Central Bank of Kenya’s (CBK) latest Bank Supervision Annual Report.
The sector’s total capital adequacy ratio stood at 20.7 percent as of December 2025, comfortably above the 14.5 percent statutory minimum, while average liquidity climbed to 59.3 percent, nearly triple the required 20 percent floor.
Pre-tax profits for the sector rose 17.7 percent to Ksh.306.3 billion, up from Ksh 260.3 billion the previous year. The CBK attributed the gain largely to cost discipline: total expenses fell by Ksh.67.4 billion, outpacing a more modest Ksh.21.5 billion drop in total income.
Total net assets expanded 10.3 percent over the year, reaching Ksh.8.35 trillion by December 2025, up from Ksh.7.57 trillion in 2024. The growth was driven chiefly by a surge in government securities holdings, which grew 18.2 percent (Ksh.384.5 billion), alongside a 6.6 percent rise in loans and advances (Ksh.240.5 billion) and a 61 percent jump in balances held at the Central Bank (Ksh.188.9 billion).
Customer deposits also grew strongly, rising 11.6 percent to Ksh.6.12 trillion, which the CBK credited to active deposit mobilization efforts by commercial banks.
Gross loans grew 6.8 percent year-on-year, reflecting rising demand for credit across various sectors of the economy. Meanwhile, asset quality showed signs of improvement: the ratio of non-performing loans (NPLs) to gross loans fell to 16.0 percent from 17.1 percent a year earlier, even as the absolute stock of NPLs edged down marginally to Ksh.696.9 billion.
The CBK pointed to loan repayments, recoveries, and a growing base of new lending as the main drivers behind the improved credit quality.
Sector Structure and Expansion
As of December 31, 2025, Kenya’s banking landscape comprised 38 commercial banks, one mortgage finance company, one mortgage refinance company, and 14 microfinance banks, alongside a broader ecosystem of nine foreign bank representative offices, three credit reference bureaus, 33 money remittance providers, eight non-operating bank holding companies, 195 digital credit providers, and 88 foreign exchange bureaus.
Ownership remained predominantly private: of 39 licensed banking institutions, 37 were privately held, with the Kenyan government holding majority stakes in only two. Among the privately owned banks, 20 were locally controlled and 17 foreign owned, the latter split between 14 local subsidiaries and three branches of international banks.
Local private commercial banks continued to dominate the sector’s balance sheet, accounting for 70.6 percent of total net assets, while foreign-owned banks held 28.9 percent and the two public banks made up the remaining 0.5 percent.
The sector also expanded its physical footprint, adding 38 new branches to bring the national total to 1,611, up from 1,573 in 2024. Nairobi County led the growth with seven new branches, part of a wider trend of banks expanding into emerging growth areas. Twenty counties saw branch network growth, four recorded declines, and 23 counties saw no change.
