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Kenyan bank profits rise 20pc to hit Sh311bn on lower costs
The performance of the lenders, such as Equity Bank Kenya and KCB Bank Kenya, will boost the group earnings of institutions, which have operations in other markets, including Uganda and Tanzania.
Kenya’s commercial banks grew their pre-tax profit by 20 percent in the year ended December 2025 to pass the Sh300 billion mark for the first time, signalling higher dividend payouts to shareholders and bonuses for staff.
Disclosures from the Central Bank of Kenya (CBK) show the lenders posted a pre-tax profit of Sh311.8 billion in the review period, up from Sh260 billion a year earlier on reduced expenses.
The performance of the lenders, such as Equity Bank Kenya and KCB Bank Kenya, will boost the group earnings of institutions, which have operations in other markets, including Uganda and Tanzania.
The performance signals a bigger headroom for banks to reward their shareholders with higher dividend payouts.
Staff bonuses and salary increments are mainly pegged on company performance, with the bumper profits giving bank employees hopes of a huge payday at the end of this month, in tandem with their employers’ performance.
“Quarterly profit before tax increased by Sh4.1 billion from Sh79.8 billion in the quarter ended September 2025, to Sh83.9 billion in the quarter ended December 2025,” said CBK.
“The increase in profitability was mainly attributable to a higher decrease in quarterly expenses of Sh11 billion compared to a decrease in quarterly income of Sh300 million.”
The industry has a return on equity of 22.2 percent signalling a good yield for shareholders, a move that has attracted global banks to buy local lenders.
Banks reported a huge drop in interest expenses last year as they reduced returns to depositors at a faster pace compared to the reduction in the cost of loans.
This saw banks report the widest interest margin in the last nine years as they squeezed depositors to protect their profits in a period when loans had been stagnant.
Total loans issued by banks rose nine percent to Sh4.36 trillion at the end of 2025, compared to Sh4 trillion at the end of 2024, with most of the lending happening in the second half of the year as interest rates declined.
The CBK has been forced to consistently lower its indicative rate to pressure banks to also cut their lending rates. Analysts expect banks to increase their dividend payout by at least 10 percent except Standard Chartered Bank of Kenya, which issued a profit warning following a court award against the lender that faced a substantial pension liability.
“When you look at how their prices have moved in the market, there is the fact that prices go up as interest rates come down, but you also see investors have processed the expected dividend payout,” said Shadrack Manyinsa, Research Analyst at Pergamon Investment Bank.
He noted most banks have held their dividends steady in the last three years as caution during a tough macroeconomic period that saw loan books stagnate and, in some instances, decline.
However, receding interest rates will give hope of improved performances going forward and encourage improved dividend payout.
KCB Group and Equity Group, which have been conservative in the last two years as they expanded in the Democratic Republic of Congo, are expected to pay more than Sh6 per share owing to their improved performance, according to Pergamon. KCB, in particular, is expected to benefit from a one-off gain from the sale of the National Bank of Kenya.
Co-operative Bank of Kenya is expected to increase its payout per share to more than Sh2, having held it at Sh1.5 in each of the last three years.
HF Group, which has been one of the fastest-growing lenders in profitability for 2025, is, however, not expected to pay a dividend, having cautioned its owners of a freeze until March 2027.
Banking counters at the Nairobi Securities Exchange have recorded double digit growth in the last three months with Co-op Bank being a top gainer among them –up 43.5 percent.
