The country’s biggest lenders have seen a sharp fall in income from foreign currency trading, highlighting the impact of a calmer exchange rate environment on a line of business that had flourished during earlier bouts of market turbulence.
In the nine months ended September 2025, Kenya’s top nine banks recorded a combined decline of Sh17.27 billion in foreign currency revenue to Sh38.67 billion, representing a 30.9 percent drop from Sh55.94 billion a year earlier.
The contraction in forex income across all top banks reflects subdued activity in currency markets after the shilling’s recovery and prolonged stability against the US dollar compared with the volatility seen previously.
The shilling traded within a narrow range of between 129.15 and 129.80 units to the US dollar during the review period, curbing both trading volumes and profit margins in the foreign exchange market. This contrasts with the same period last year when local currency fluctuated widely between 128.46 and 161.36 units to the dollar.
The impact has been felt across the banking sector, with all major lenders reporting year-on-year declines in foreign exchange trading income over the nine-month period.
KCB Group recorded the largest absolute drop in foreign exchange trading income. Its earnings from currency trading declined by Sh5.52 billion to Sh8.24 billion from Sh13.76 billion in the previous year, a fall of 40.1 percent.
Standard Chartered Bank Kenya registered the steepest percentage decline, with forex trading income dropping by 58.9 percent to Sh2.74 billion from Sh6.68 billion previously—a fall of nearly Sh4 billion. Stanbic Bank Kenya also reported a contraction, with income from the segment falling by 49.2 percent to Sh3.13 billion.
Equity Group’s forex trading income declined by 5.2 percent to Sh8.76 billion. Cooperative Bank of Kenya saw a 21.7 percent drop to Sh2.92 billion, while I&M Group posted a 13.6 percent decline to Sh2.42 billion.
Absa Bank Kenya was among the least affected, with forex trading income easing by 4.8 percent to Sh4.53 billion. DTB Group’s income from currency trading fell by 40.4 percent to Sh2.22 billion while NCBA reported a 27.2 percent decline to Sh3.71 billion.
Banks had enjoyed elevated forex income during periods of elated volatility that started in Covid-19 pandemic period in 2020 and stretched to early last year as concerns lingered over the country’s ability to settle the $2 billion (Sh258.3 billion) Eurobond that was due to mature in June 2024.
Foreign currency dealings had in recent years become a major contributor to banks’ non-interest income. Banks’ forex desks benefited from the elevated activity and wider spreads that typically accompany such conditions of uncertainty.
Central Bank of Kenya (CBK) data shows income from foreign exchange trading had nearly doubled to Sh74.34 billion in the financial year ended December 2022 from Sh38.51 billion in the previous year on higher volatility on the shilling. However, the revenue from currency trades eased, dropping to Sh69.98 billion in 2023 and Sh62.52 billion last year.
The shilling had hit above 161 units to the dollar at the height of a foreign currency crisis in January last year but started improving after Kenya tapped $1.5 billion (Sh193.69 billion) Eurobond to buy back part of the $2 billion bond that was falling due in June 2024.
Foreign exchange trading income, which banks earn from buying and selling currencies for clients and their own books, usually rises during periods of sharp exchange rate movements. Volatility increases client demand for hedging and speculative trades, while also widening spreads. However, a stable currency environment limits trading volumes and dampens margins.
The issuance of a new Eurobond and the subsequent payment of the $2 billion debt ahead of schedule steadied the shilling, narrowing price movements in the market amid new CBK rules that tamed speculation and enhanced transparency in forex dealings.
The lack of large swings in the exchange rate have seen clients scale back trading activity, translating into lower earnings for banks from currency buying and selling.
