Kenyan banking sector shows improved financial strength and market concentration

The Kenyan banking sector is experiencing improved financial performance and shifting market dynamics. According to the Central Bank of Kenya (CBK) Bank Supervision Annual Report 2025, KCB Group remains the largest commercial bank with a 17.3 per cent market share, followed by Equity Bank at 11.8 per cent and Co-operative Bank at 9.4 per cent. The eight largest banks in the Tier 1 category collectively control 69.7 per cent of the market.

Moody’s Ratings reports that Kenyan lenders are entering a period of stronger financial strength driven by lower funding costs, recovering loan growth, and improved asset quality. While declining interest rates are putting pressure on asset yields, banks have maintained margins as deposit funding costs have fallen more rapidly. Despite these improvements, Moody’s notes that high levels of non-performing loans (NPLs) and significant exposure to domestic government debt remain primary constraints on the sector’s credit strength.