The banking sector’s attributable net earnings grew 17.2% in the first half of 2026, driven by lower interest expenses, recovering credit demand and higher non‑interest income, according to a valuation report by SIB.

Combined profit after tax for the covered banks reached KSh153.5 billion, while pre‑tax profit from core banking operations rose 16.4% year‑on‑year to KSh172.4 billion.

Net interest income increased 11.4%, with interest income up 5.9% and interest expenses down 5.4%, while non‑funded income rose 17.2% to KSh159.1 billion, helped by a 12.2% rebound in foreign‑exchange trading and a 17.3% jump in fees and commissions.

Equity Group posted the highest attributable net earnings at KSh43.8 billion, a 31.5% increase from the same period last year, supported by strong performance in its Kenyan operations and regional subsidiaries, which saw profit after tax rise 27%.

The group’s insurance arm also expanded, with gross written premiums up 24% to KSh6.4 billion and profit before tax climbing 34% to KSh1.2 billion.

KCB Group recorded a 14.5% rise in attributable earnings, aided by lower interest costs, contained operating expenses and loan‑book growth; its gross non‑performing loan ratio stood at 15.1% in H1 2026.

The bank’s board recommended an interim ordinary dividend of KSh3 per share, a 50% increase over the KSh2 interim dividend paid in 2025.

Co‑operative Bank’s attributable earnings grew 28% year‑on‑year, reflecting higher business volumes; its IFRS loan‑loss coverage improved to 80.7% from 69.9% and its cost of risk fell to 1.8% from 2.4%.

The lender is targeting total assets of KSh1 trillion and plans to restructure into a holding company to broaden its financial‑services footprint regionally.

SIB’s valuation assigns Buy recommendations to Equity Group (fair value KSh122.26 vs market KSh104) and KCB Group (fair value KSh113.08 vs market KSh89.75), while recommending Hold for Co‑operative Bank (fair value KSh37.22 vs market KSh36.95).

The report notes that despite earnings gains, sector outlook faces risks from geopolitical tensions, rising input costs, government borrowing pressures and uncertainty ahead of the 2027 General Election.