Kenyan banks expand MSME loan book by 30% to Ksh 424B

Local commercial banks increased their lending to Micro Small and Medium Enterprises by 30% in nine months of the year to hit Ksh 424.7 billion as credit cost fell. According to data by the Kenya Bankers Association, MSMEs lending increased from Ksh 326.5 billion registered over same period in 2025 as the industry is poised enhance credit to small businesses. “This sustained financing momentum places the banking sector within striking distance of its Ksh 500 billion full-year target, setting the stage for the country to register its highest-ever annual lending volume to small businesses,” said KBA. The data reveals that Equity Bank disbursed the largest share of credit to MSMEs totaling Ksh 128 billion which is equivalent to 30.1% of total loans. “The bank’s disbursements were more than double those of its closest peer, Co-operative Bank, and more than three times the volume recorded by third-placed KCB. In fact, Equity provided more capital to small enterprises on its own than the second- and third-ranked lenders combined,” the association stated. Co-op Bank emerged as the second largest issuance of loans to the sector totaling Ksh 60.3 billion equivalent to 14.2% of total loans. In nine months of the year to September 226, KCB Bank, Family Bank and NCBA disbursed Ksh 41.1 billion, Ksh 31.8 billion and Ksh 25.9 billion respectively. The association attributes the sustained credit growth to MSMEs to improving macroeconomic climate characterized by softening borrowing costs and revitalized private enterprise demand. KBA says during the period under review, average commercial bank lending rates moderated to 14.4% in September 2026 from the 17.2% recorded in November 2024. “Cheaper credit has fostered renewed business confidence, lifting overall private sector credit expansion to 10.6% in September from 10.3% in August,” added KBA. KBA also noted improvements in repayment of loans during the period as the gross non-performing loan ratio contracted to 13.9% from 14.8% recorded in June 2026 and 17.6% in August last year. The association ties reduction in bad loans to sound credit risk appraisal across the industry, coupled with healthier cash flows among operating businesses as supply chain bottlenecks and inflationary pressures subsided. The post Kenyan banks expand MSME loan book by 30% to Ksh 424B appeared first on KBC Digital .

Read also Ziidi Trader Fuels Retail Participation in Quickmart’s Sh2.9 Billion IPO