Every quarter the Central Bank of Kenya publishes the numbers behind the banking sector, and every quarter they read like a story about banks. Look closer and it is a story about you: how much it costs you to borrow, how easily you can, and how much trouble you are in when you do. The mid-2026 figures are the friendliest that story has been in years.
The headline: a record loan book
Kenyan banks' gross loans reached KSh 4.65 trillion by the end of June 2026, crossing KSh 4.5 trillion for the first time. That is up KSh 498.2 billion, or 12%, from KSh 4.15 trillion a year earlier. In plain terms, banks are putting substantially more of their money into people's hands than they were in 2025.
It is not concentrated at the top end either. Private sector credit grew 10.2% in the year to July 2026, and the sectors where credit uptake grew fastest include trade and private households. A lot of this record loan book is shopkeepers financing stock and families smoothing school fees and bills. It is the same borrowing paybillke readers do every month.
Why borrowing got cheaper
The engine behind it is the Central Bank Rate, the benchmark that sets the floor for what banks charge. CBK cut it from 10.75% to 8.75% and has now held it there for three consecutive Monetary Policy Committee meetings. Bank lending rates followed, slowly: the average commercial bank lending rate was 14.38% in June 2026 and 14.39% in July, down from 14.7% in April and a long way below the 17.2% of late 2024.
That drop sounds small. On a KSh 500,000 loan over three years it is a few thousand shillings, not a fortune. The bigger number is the one underneath the average. CBK's July 2026 table covering 38 commercial banks put average lending rates in a range from 10.59% to 19.06%. That is a spread of roughly 8.5 percentage points between the cheapest and the dearest lender, which dwarfs anything the rate cuts did to the average.
Bad loans are falling, which matters more than it sounds
The number that quietly matters most is non-performing loans, the lending borrowers have stopped repaying for three months or more. Gross bad loans fell to KSh 688.2 billion by the end of June 2026, from KSh 728.5 billion a year earlier. That is a drop of about KSh 40.1 billion, and against a KSh 4.65 trillion book it works out at roughly 14.8% of all lending, down from 15.6% in March and the lowest share since the end of 2023.
Why should a borrower care about other people's defaults? Because the default rate is what makes banks cautious or generous. When one loan in six is going bad, banks price that risk into everyone's rate and tighten who they lend to. As defaults fall, the opposite happens: approval gets easier and pricing loosens. The falling NPL ratio is the mechanism behind the cheaper, more available credit, not a separate fact sitting beside it.
The banks are having a very good year
Sector profit before tax was KSh 83.5 billion in the first quarter of 2026, up 13.6% on the same quarter a year earlier, and KSh 111.8 billion across the first four months, up from KSh 98.2 billion. The big lenders went on to post their strongest half-years on record.
The three largest groups, half-year 2026
One caution before the table. These are the figures for the listed groups, which include banking operations outside Kenya. The sector totals above are CBK data for Kenyan banking operations only. That is why Equity Group's profit here looks large against the sector number: a meaningful share of it is earned in the DRC, Uganda, Rwanda and Tanzania, and none of that is inside CBK's Kenyan figures. The two sets of numbers are not comparable line for line, and anyone putting them side by side without saying so is publishing a confusion.
| Group | H1 profit before tax | Change | Net loans |
|---|---|---|---|
| Equity Group | KSh 57.8 billion | up 39% | KSh 981 billion, up 19% |
| KCB Group | KSh 49.3 billion | up 20.8% | about KSh 1.3 trillion |
| Co-operative Bank Group | KSh 23.1 billion | up 17.3% | KSh 462.2 billion, up 18.1% |
For a borrower the practical read is that the biggest banks are competing hard for lending right now, which is good for your negotiating position. But the smaller banks are hungrier still, and given that 8.5-point spread, they are worth a quote before you sign anything.
The other loan book: 252 apps and counting
None of the figures above include the fastest-moving part of Kenyan borrowing, the mobile loan apps. By July 2026 the CBK had licensed 252 Digital Credit Providers, up from 195 at the end of 2025. Between them they had disbursed 8.37 million loans worth KSh 150.56 billion by May 2026.
That is a staggering number of small loans, and it is the layer most readers here actually touch: Tala, Branch, Zenka, M-Shwari, KCB M-PESA, the Hustler Fund. The good news is that CBK licensing has pushed out most of the predatory unlicensed lenders and capped the worst practices. The caution is that 8.37 million loans is a lot of people leaning on short-term credit, and the daily-fee products remain the most expensive money most Kenyans will ever borrow.
So what should you actually do
The 2026 environment rewards the borrower who shops and the one who repays, and punishes the one who drifts. Concretely:
- Reprice old debt. If your loan predates the cuts, ask your bank to reprice or get a fresh quote elsewhere. The CBR fell two full points. Make sure your rate did too.
- Compare before you borrow. Average bank lending rates ran from 10.59% to 19.06% in July. Ten minutes of comparison beats loyalty by more than the rate cuts did.
- Use cheap credit for the cheap-credit jobs. Bank and SACCO loans for anything you will hold for months. App loans only for genuine short bridges.
- Protect your record. Falling default rates are why credit got easier. Yours is the version of that story your lender sees. Clear on time, and if you are CRB-listed, clear it and request the status update, because a clean record is worth more in approvals and pricing than it has been in years. Missing repayments on a secured loan can also cost you the asset, and a CRB listing follows you to every other lender.
Where to go next
- Comparing short-term credit: the best loan apps in Kenya 2026 and loan apps that do not check CRB.
- Repaying what you owe: M-Shwari, KCB M-PESA, Tala and the Hustler Fund.
- The cost side: the M-PESA charges 2026 guide and the Fuliza true cost breakdown.
- Sending to a bank: KCB, Equity, Co-op, or any Kenyan bank.
Further reading
Curated external sources we cite. Open in a new tab.
M-Pesa Fuliza Calculator
Fuliza overdraft access fee + daily charges calculator.
mpesa.or.ke · calculator
M-Shwari Calculator
M-Shwari savings interest + loan interest calculator (NCBA).
mpesa.or.ke · calculator
M-Pesa Taasi Till Loan Calculator
Taasi merchant lending product specifically.
mpesa.or.ke · calculator
Frequently asked questions
How big is Kenya's bank loan book in 2026?
Kenyan banks' gross loans reached KSh 4.65 trillion by the end of June 2026, up KSh 498.2 billion or 12% from KSh 4.15 trillion a year earlier.
Are loan interest rates falling in Kenya?
Yes. The Central Bank Rate fell from 10.75% to 8.75% and has been held there for three consecutive MPC meetings. The average commercial bank lending rate was 14.38% in June 2026 and 14.39% in July. If your loan predates the cuts, ask your bank to reprice.
Is it easier to get a loan in Kenya now?
Generally yes. Gross bad loans fell to KSh 688.2 billion by June 2026 from KSh 728.5 billion a year earlier, about 14.8% of lending, and private sector credit grew 10.2% in the year to July. Falling defaults make banks lend more freely and price more competitively.
Which bank in Kenya has the cheapest loans?
It depends on the borrower, but the spread is wide. CBK's July 2026 table of average lending rates across 38 commercial banks ranged from 10.59% to 19.06%, a gap of about 8.5 percentage points. Comparing is worth more than loyalty.
How many digital loan apps are licensed in Kenya?
The CBK had licensed 252 Digital Credit Providers by July 2026, up from 195 at the end of 2025. They had disbursed 8.37 million loans worth KSh 150.56 billion by May 2026.
Are digital app loans cheaper than bank loans?
Almost never in annual terms. A small daily or monthly fee on a mobile loan can annualise to a rate many times a bank's 14.4%. Use app loans for short bridges you can clear quickly, not as a rolling overdraft.
Sources
- Central Bank of Kenya, Licensing of Digital Credit Providers, July 2026. The 252 providers, 8.37 million loans and KSh 150.56 billion.
- Business Daily, Bank loan defaults dip Sh40bn on lower rates. CBK data for the loan book and non-performing loans to June 2026.
- The Kenya Times, CBK releases June 2026 bank interest rates and July 2026 lending rates for 38 commercial banks.
- The Kenyan Wallstreet, Kenya's banking sector Q1 2026. Sector profit before tax of KSh 83.5 billion.
- Group half-year results as reported: Equity Group and KCB Group (August 2026) and Co-operative Bank HY2026 interim report.
Figures are CBK sector data and published company results as at 16 September 2026. CBK periodically revises sector figures, so where a number matters to a decision you are making, check the latest release. Some figures circulating in coverage of the half-year results, including a sector return on equity and quarterly profit totals, are not published here because we could not confirm them against a second source.