Banking, Finance & Economic Policy
Kenyan Banks Split Profits as Investors Watch
I&M Group’s 36% profit surge underscores resilience among homegrown banks, even as Standard Chartered Kenya’s earnings slide 21%. Analysts say local agility and regional expansion are driving the performance split.
Kenyan banks post mixed profits as locals surge and foreign lenders stumble, drawing global investor scrutiny amid rate shifts.
Kenyan Banks’ Diverging Fortunes Stir Investor Interest as Profit Gap Widens
NAIROBI, Oct. 9 (BW Africa) — Kenya’s banking industry is facing its most uneven earnings season in years, with local lenders delivering double-digit profit growth while foreign-owned peers retreat under the weight of shrinking margins, high funding costs, and tighter regulatory scrutiny.
Fresh half-year data reviewed by BW Africa shows that domestically controlled lenders — led by I&M Group, Equity Group, and NCBA — outperformed their foreign rivals in nearly every key metric: net earnings, deposit growth, and loan expansion. The divergence is sharpening investor focus on how well Kenyan banks can sustain returns in an economy wrestling with high interest rates and a fragile currency.
Local Banks Outpace Global Peers
I&M Group, Kenya’s fifth-largest lender by assets, posted a 36% jump in after-tax profit to KSh 8.1 billion ($63 million), lifted by strong net interest income and regional growth in Tanzania and Uganda. Equity Group Holdings, East Africa’s largest bank by customer base, reported a 16.9% rise in profit to KSh 34.6 billion ($268 million), driven by cross-border earnings that now account for almost half of group income. NCBA Bank followed with a 12.6% gain.
By contrast, Standard Chartered Kenya suffered a 21% decline in half-year profit, hurt by weaker non-interest income and higher provisioning for bad loans. Stanbic Holdings, majority owned by South Africa’s Standard Bank Group, saw profit drop 9% amid rising funding costs.
“The market is drawing a clear line between banks that understand Kenya’s retail dynamics and those that rely on foreign playbooks,” said James Mugo, senior research analyst at Nairobi-based Sterling Capital. “Local lenders are winning on agility, regional diversification, and customer stickiness.”
Rate Policy, Inflation, and Macro Uncertainty
The earnings split comes as the Central Bank of Kenya (CBK) cut its policy rate for the eighth time this year — trimming it to 9.25% from 9.50% — to stimulate private-sector lending after months of high credit costs. Inflation eased to 4.6% in September, comfortably within the CBK’s 2.5–7.5% target band.
But beneath the easing cycle lies a complex story. Kenya’s debt-service costs remain high, the shilling has shed more than 14% against the dollar since January, and liquidity pressures persist in the interbank market. The government heads to Washington next week for fresh talks with the IMF over a new support programme to stabilize external financing — a move investors say could influence capital flows and banking liquidity.
“Global funds are watching closely,” said Lisa Wentworth, sub-Saharan Africa strategist at Ashbourne Advisory, London. “Kenya’s domestic banks look strong on paper, but sovereign risk is still a factor. The currency, fiscal space, and IMF conditionalities will determine how far these profits can go.”
Why Local Banks Are Winning
Analysts attribute the outperformance of Kenyan-controlled lenders to a mix of home-field advantage and regional reach.
- Lending focus: Local banks have kept exposure to SMEs and retail customers, segments that rebounded fastest after the pandemic.
- Deposit resilience: Local lenders’ customer-driven deposits rose an average 14% year-on-year, cushioning them from expensive wholesale funding.
- Cost discipline: Digital transformation — led by Equity’s EazzyBanking and Co-operative Bank’s MCo-op Cash — has trimmed overheads and improved fee income.
- Regional buffer: Cross-border earnings from Uganda, Tanzania, Rwanda, and the DRC have offset Kenya’s slow loan demand.
Foreign lenders, meanwhile, remain constrained by legacy business models, strict compliance costs, and less exposure to mobile banking ecosystems.
“Standard Chartered and Stanbic are facing the same squeeze seen across emerging markets — lower net interest margins and higher dollar funding costs,” noted Charles Maina, economist at Cytonn Investments. “Their cost-to-income ratios have ballooned to over 50%, compared with 43% for top-tier local banks.”
Investor Reactions Mixed
The Nairobi Securities Exchange’s Banking Index has gained 7% this quarter, led by I&M Group and Co-operative Bank. Yet the rally masks uneven sentiment. Foreign institutional investors have trimmed exposure to multinationals, rotating into high-yield local names.
“Equity’s consistent earnings trajectory and regional diversification make it a core long-term holding,” said Rajiv Mehta, portfolio manager at Frontier Capital Partners, Dubai. “But we’re cautious on banks overly exposed to Kenya’s government paper, given potential repricing risk if the IMF deal changes fiscal assumptions.”
The CBK’s new risk-based pricing framework, allowing banks to price loans according to borrower risk, is also reshaping the market. While it supports profitability, it could raise default rates if economic recovery falters.
Clouds on the Horizon
Even Kenya’s best-performing banks face emerging threats. Non-performing loans have inched up to 14.2% of total lending, compared to 13.8% six months earlier, as households grapple with high living costs and businesses delay repayments.
Regulatory pressure is also intensifying. The CBK has signaled plans to enforce stricter capital adequacy ratios and enhance oversight of digital lending. Foreign banks may face heavier scrutiny on cross-border transactions, while local lenders could be tested on cybersecurity and consumer protection compliance.
“There’s no room for complacency,” warned Patrick Njoroge, the outgoing CBK governor, in a September policy statement. “We expect banks to maintain strong buffers and uphold prudent lending even in the face of temporary profit spikes.”
The Broader Picture
Kenya’s banking sector remains one of Africa’s most sophisticated, accounting for more than 50% of East Africa’s total banking assets. The system’s stability, bolstered by robust supervision, continues to attract global funds seeking exposure to high-yield African financials.
Yet the current profit divergence underscores a deeper structural shift — one that could redefine market leadership. Local lenders are increasingly regional champions, while foreign-owned banks are recalibrating or retreating to niche segments like corporate banking and trade finance.
For investors, the message is nuanced: Kenya remains an attractive, but complex, frontier. The coming months — particularly the outcome of IMF negotiations and currency stabilization efforts — will determine whether the strong earnings by domestic banks mark the start of a sustained growth cycle or a temporary outperformance in turbulent waters.
“Kenyan banks are learning to thrive in volatility,” said Mugo of Sterling Capital. “The question now is who can stay profitable when global capital tightens again.”
Banking, Finance & Economic Policy
Ethiopia Tightens Banking Rules for Stability
The National Bank of Ethiopia is pushing lenders to strengthen their balance sheets under new capital and forex requirements. Analysts say the reforms could pave the way for foreign investment in Ethiopia’s banking sector.
Ethiopia’s central bank raises capital and forex rules to strengthen banks and attract investors seeking stable frontier markets.
Ethiopia Tightens Banking Rules for Stability
By Charles Wachira | November 10, 2025
Ethiopia’s central bank has rolled out sweeping reforms to strengthen its banking sector and restore investor confidence. The National Bank of Ethiopia (NBE) announced new rules that raise capital requirements and limit banks’ exposure to foreign exchange risks.
In October,NBE proposed a new directive limiting foreign ownership in domestic banks to 49%.
The move aims to align Ethiopia’s financial system with global standards. It also signals a push to restore market confidence after years of inflation, currency shortages, and liquidity pressure.
According to StockMarket.et, the reforms target stronger balance sheets and more disciplined currency management. Analysts say this is one of the most decisive steps by the regulator in recent years.
New Capital and FX Requirements
Banks must now meet higher minimum paid-up capital levels, consistent with international benchmarks. The NBE has also introduced a foreign exchange exposure cap of ±18% of Tier 1 capital per day.
This means banks can no longer hold large foreign currency positions beyond that limit. The goal is to control speculative trading and protect the banking system from shocks in the currency market.
“We want to build a safer and more transparent banking system,” said an NBE official. “Capital adequacy and currency discipline are essential for long-term stability.”
Impact on Local Banks
The reforms come at a time when many Ethiopian banks are expanding aggressively. Yet several remain below global capital thresholds.
The Commercial Bank of Ethiopia (CBE) still dominates the market, but private players like Awash Bank, Dashen Bank, and Nib International Bank have been catching up fast. They now face pressure to raise new capital or explore mergers to meet the new requirements.
According to analysts at Cepheus Capital, these changes mark the start of a new phase in Ethiopia’s financial liberalization. The government is preparing to open the banking sector to foreign investors, a move that could attract regional and international capital.
Building Investor Confidence
Ethiopia, home to more than 120 million people, has long been seen as a potential investment destination in East Africa. Yet regulatory uncertainty and currency volatility have discouraged many global investors.
The new rules aim to change that perception. They are part of a wider plan to build transparency, predictability, and resilience into the financial system.
Economist Dr. Tsedale Mebratu of Addis Ababa University believes this policy shift could mark a turning point. “The reforms strengthen trust and transparency,” she said. “But smaller banks may struggle to meet compliance costs without raising extra capital.”
Addressing Foreign Exchange Risks
Ethiopia’s currency, the birr, has been under constant pressure. The country has faced chronic foreign exchange shortages that have disrupted imports and debt payments.
By limiting exposure to ±18% of Tier 1 capital, the NBE hopes to reduce speculative positions in the FX market. This step mirrors similar reforms taken by the Central Bank of Kenya (CBK) and the Bank of Ghana, which tightened rules after currency turbulence in recent years.
If properly implemented, the policy could help stabilize the birr and reassure global lenders like the World Bank and the International Monetary Fund (IMF).
Part of a Broader Economic Reform Agenda
The changes form part of Ethiopia’s wider economic transformation plan under Prime Minister Abiy Ahmed. His administration has been liberalizing strategic sectors such as telecommunications, logistics, and finance to attract private investment.
One of the most notable milestones was the 2023 entry of Safaricom Ethiopia, a subsidiary of Safaricom PLC (Kenya). That deal marked one of the largest foreign investments in Ethiopia’s history.
The government hopes the same success can be replicated in banking, insurance, and other services. The NBE’s new regulations, therefore, set the groundwork for a more modern, globally integrated financial system.
Analysts’ Global Perspective
International markets have taken note of Ethiopia’s reforms. Investors tracking African frontier economies say the new measures show commitment to transparency and policy discipline.
However, they also caution that effective enforcement will be key. “Ethiopia’s challenge isn’t introducing new rules — it’s enforcing them fairly,” said Richard Manson, Africa analyst at Frontier Advisory Group in London. “If done right, these reforms could put Ethiopia closer to Kenya and Nigeria in investor confidence.”
The Road Ahead
The tightening of banking rules represents more than a regulatory change. It reflects Ethiopia’s determination to build credibility in global financial markets.
For the NBE, success will depend on consistent enforcement and collaboration with commercial banks. For investors, the reforms offer a clearer signal that Ethiopia is serious about modernizing its economy.
In the long term, these moves could strengthen the country’s financial stability and help it emerge as a regional financial hub in the Horn of Africa.
Banking, Finance & Economic Policy
Treasury Ousts Consolidated Bank Board
Treasury Cabinet Secretary John Mbadi dissolves Consolidated Bank board. The move signals heightened regulatory scrutiny and raises questions about governance in Kenya’s state-owned banks.
Kenya’s Treasury fires Consolidated Bank’s board and CEO, signalling tougher financial governance and oversight reforms.
Kenya Fires Consolidated Bank Board in Governance Shake-Up
November 10, 2025—Kenya’s financial sector grabbed global attention after Treasury Cabinet Secretary John Mbadi dismissed the entire board and CEO of Consolidated Bank of Kenya. The move triggered regulatory intervention from the Central Bank of Kenya (CBK). It also raised concerns about political influence in the banking sector.
The decision came after Treasury rejected the board’s plan to renew CEO Sam Muturi’s contract. Muturi had just delivered the state-owned lenders’ first profit in 15 years. On October 3, Mbadi revoked the appointments of three directors who supported Muturi. He then installed Dr. Murage Njeru, a University of Nairobi lecturer, as acting CEO. CBK immediately rebuked the move.
“Institutions must ensure that no person is appointed or elected as a director or senior officer unless the Central Bank has certified them,”
— Timothy Kimutai, Deputy Director of Bank Supervision, CBK
Regulatory Clash and Political Overtones
CBK protested that Dr. Njeru had not undergone the mandatory “fit and proper” assessment under Section 9A of the Banking Act.
Dr. Njeru had recently stepped down from the Mbeere North parliamentary by-election. He stepped aside in favor of a United Democratic Alliance (UDA) candidate. The party is led by President William Ruto. Meanwhile, his brother, Charles Njagagua, who chaired the bank, was also removed. The institution was left without a functioning board.
Founded in 1989 through a merger of nine troubled lenders, Consolidated Bank has long reflected Kenya’s delicate balance between commercial independence and political oversight.
“This development signals heightened regulatory scrutiny and a possible shift in how Kenya enforces governance in publicly owned banks,” said an analyst at Sterling Capital Ltd.
“But it also raises concerns about board autonomy and the predictability of oversight.”
CBK’s Balancing Act
CBK now faces a tough task. It must enforce prudential rules while managing political pressure. The regulator has questioned the legality of some Treasury appointments. One example is Jane Njogu, a Treasury representative whose second term allegedly lacked CBK approval.
The Bank insists that no senior officer should assume office without clearance. This protects depositors and maintains market confidence. Analysts say CBK’s firm stance reassures investors that supervision standards remain intact despite political challenges.
Global Implications
The dispute has drawn international attention. It mirrors governance challenges across emerging markets. For investors and multilateral lenders, the situation raises questions about policy consistency and institutional independence. These are key factors when assessing country risk.
“What’s happening at Consolidated Bank is not just a domestic issue; it’s a test of Kenya’s commitment to corporate governance reforms,”
— Dr. Emmanuel Okoth, Economist, University of Nairobi
As Nairobi aims to become a regional financial hub, such governance disputes could hurt investor confidence. The success of Kenya Vision 2030 and the Bottom-Up Economic Transformation Agenda (BETA) depends on a stable and credible banking system.
Legal Fallout and Leadership Vacuum
Ousted CEO Sam Muturi filed a petition at the Employment and Labour Relations Court. He seeks reinstatement or KSh76 million in compensation. Muturi argues the Treasury overstepped its authority. The case could set a landmark precedent on executive interference in bank governance.
The bank now faces a leadership vacuum. Six of eleven senior roles are held in acting capacity. This includes heads of legal, risk, finance, and retail divisions. Analysts warn that instability could reverse the gains achieved under Muturi, just as the bank was starting to recover.
What Lies Ahead
The shake-up highlights Kenya’s ongoing struggle to balance government oversight with institutional independence. Treasury’s push to restructure state-owned enterprises may increase accountability. But it also exposes weak points in governance frameworks.
For investors and policymakers in East Africa, the Consolidated Bank saga sends a clear message: transparency, consistency, and regulatory autonomy are essential for sustaining confidence in Kenya’s banking future.
Bottom Line
The ouster of Consolidated Bank’s leadership is more than a boardroom reshuffle. It is a litmus test for Kenya’s governance credibility. How quickly the State, CBK, and judiciary resolve this standoff will determine whether reforms strengthen or strain investor faith in one of Africa’s most dynamic banking markets.
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Banking, Finance & Economic Policy
I&M Bank Kenya Announces CEO Leadership Change
Regional operations now play a major role in I&M’s revenue. Leadership change may strengthen cross-border synergy.
I&M Bank Kenya appoints Kihara Maina as interim CEO, replacing Gul Khan—signalling a strategic shift at the East African lender.
I&M Bank Kenya has announced a leadership change. Gul Khan, the current CEO, will step down. Kihara Maina, Regional CEO of I&M Group PLC, will take over on an interim basis. The move is pending regulatory approval.
The announcement signals a possible strategic shift at one of East Africa’s top banks. It may affect investors’ perception and operational priorities.
Leadership Transition Details
Gul Khan has led the Kenyan unit for several years. Under his leadership, I&M Bank expanded digital services and SME lending. Meanwhile, Kihara Maina previously served as CEO and later as Regional CEO.
According to Dawn Africa, Maina’s return emphasizes continuity and alignment with regional operations. Analysts say this may improve coordination between Kenya and the group’s subsidiaries in Rwanda, Tanzania, and Uganda.
Strategic Implications
The Kenyan banking sector is highly competitive. Banks face challenges from rising interest rates, fintech disruption, and regulatory changes.
By appointing Maina, I&M Bank signals a renewed focus on regional integration. It also suggests the bank wants to strengthen digital channels and improve operational efficiency.
Company Background
I&M Group PLC is listed on the Nairobi Securities Exchange. The group has operations in Kenya, Uganda, Tanzania, Rwanda, and Mauritius. Its strategy focuses on digital banking, regional expansion, and SME ecosystem services.
The group’s “iMara” initiative aims to integrate technology and customer experience across borders. Maina’s leadership is expected to accelerate this agenda.
Investor Perspective
Leadership changes at the CEO level carry investor attention. Shareholders will watch how the new leadership manages growth and profitability.
I&M Bank Kenya reported KSh 11.3 billion profit after tax in 2024, up 17% from the previous year (Business Daily Africa). Maintaining momentum during this transition is critical.
Regional Context
I&M Bank competes with major regional banks such as Equity Group, KCB, and Co-operative Bank.
Regional subsidiaries are crucial. They now contribute significantly to group deposits, loans, and revenue. Maina’s experience across markets is expected to strengthen these operations.
Outlook
Investors and clients will be watching closely. Key questions include:
- Will digital banking expansion accelerate under Maina?
- How will SME products evolve in Kenya and the region?
- Can the bank maintain growth and profitability amid the leadership change?
According to Dawn Africa, the transition may mark a strategic chapter for I&M Bank. The focus will likely be on innovation, digital expansion, and regional integration.
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