Kenyan banks are preparing to release their FY 2025 results following a record year for the sector, with investors focusing on profitability, dividends, loan quality, and the effect of new regulatory pricing models.
Industry data shows aggregate pre-tax profit for banks in Kenya rose 20% to KSh 311.8 billion, the first time the sector has crossed the KSh 300 billion mark. The strong performance sets the backdrop for the upcoming earnings season, where lenders are expected to publish results detailing how falling interest rates, improving loan quality and regional expansion affected their balance sheets.
Below are four themes investors are watching closely as banks begin releasing their FY 2025 financial statements.
Record Profitability and Dividend Expectations
The banking sector enters the reporting season after posting the strongest earnings in its history, and analysts expect the performance to translate into higher shareholder payouts. For the 2024 financial year, Kenyan banks paid a combined KSh 85.27 billion in dividends, a 35% increase from the previous year. The increase came after strong earnings across the sector.
Standard Chartered Bank Kenya led the industry with a total dividend payout of KSh 45 per share, equivalent to about KSh 17 billion, after reporting a 45% increase in net profit. KCB Group reinstated dividends after skipping a final payout in 2023, distributing KSh 3 per share, or KSh 9.6 billion. Equity Group Holdings distributed KSh 16.04 billion to shareholders, one of the largest cash payouts in the market.
Co‑operative Bank of Kenya maintained a total payout of KSh 1.50 per share, but introduced its first interim dividend of KSh 1.00 in late 2024. NCBA Group increased its total payout to KSh 5.50 per share, including an interim dividend of KSh 2.25 and a final dividend of KSh 3.25.
Dividend payouts are expected to rise by at least 10% for most lenders when FY 2025 results are released. Some forecasts place potential payouts from KCB Group and Equity Group at more than KSh 6 per share. An exception may be Standard Chartered Kenya, which issued a profit warning linked to a pension liability court award that could affect its final distribution.
Sector profitability remains strong, with the industry’s average return on equity standing at about 22.2%.
Interest Income Dynamics After Rate Cuts
The Central Bank of Kenya reduced the Central Bank Rate (CBR) several times, bringing it down to 8.75% by early 2026. Banks reacted by lowering returns paid on deposits faster than lending rates were reduced, which led to a sharp drop in interest expenses. The result was a widening of net interest margins, with banks reporting their widest margins in roughly nine years.
However, as rates continue to ease, lenders may record slower growth in interest income. Investors will therefore monitor whether banks increase non-interest income, particularly fees and commissions from digital services and transaction banking.
Gradual Improvement in Asset Quality
Loan performance across the sector has begun to stabilize after several years of rising defaults. According to data from the Central Bank of Kenya, the gross non-performing loan (NPL) ratio declined to 15.5% in January 2026, the lowest level recorded since early 2024.
Among listed banks, Standard Chartered Kenya posted one of the strongest loan books in 2024 with an NPL ratio of 7.4%, down from 9.7% in 2023. Stanbic Holdings followed with an NPL ratio of 9.1%, while the market-weighted average among listed lenders stood at 13.2%. However, KCB Group reported an NPL ratio of 19.8%, largely linked to regional subsidiaries and legacy loan exposures.
Across the sector, the building and construction and real estate segments remain the most affected, with NPL ratios of 47.5% and 41.1% respectively. Recent declines in borrowing costs have helped improve repayment trends in real estate, manufacturing and construction loans.
Regional Subsidiaries Drive Group Earnings
Regional expansion remains a major earnings driver for Kenya’s largest lenders. Subsidiaries in markets such as the Democratic Republic of the Congo, Rwanda, and Tanzania now contribute between 30% and 45% of total group profits for some banks. For Equity Group, assets outside Kenya account for about 47% of the group’s balance sheet, showing how regional operations are shaping growth.
Investors will also watch whether banks inject additional capital into certain subsidiaries. Analysts point to potential recapitalisation needs in some of KCB Group’s regional units, including operations in Uganda and Tanzania.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.