Kenya’s banking sector is no longer moving as one trade, according to the FY25 Kenya Banking Sector Report by Wall Street Africa Group.
- •FY25 results show a market increasingly divided between banks with strong structural earnings drivers and those still relying on one-off gains, balance sheet clean-ups or defensive models to hold returns together.
- •Two names stood out most clearly in the report: Equity Group and ABSA Bank Kenya, which emerged from FY25 with return profiles that place them ahead of much of the listed banking pack, though they got there in very different ways.
- •Wall Street Africa's analysis shows that Kenya's banking sector is now separating into institutions with structural return drivers and institutions still in transition.
Equity posted a 26.4% return on average equity, while ABSA delivered 24.7%, making them the strongest ROaE names in the cohort. Our FY25 report argues that this leadership is not just cyclical, it reflects more durable business model advantages.
For Equity, the story is increasingly regional.
Its subsidiaries contributed more than half of banking profit before tax in FY25, with the Democratic Republic of Congo alone accounting for roughly 30% of group PBT. Uganda, Tanzania and Rwanda also posted strong momentum, reinforcing the case that Equity’s growth story is no longer dependent on Kenya alone.
ABSA’s advantage is different. Its strength is coming from efficiency.
The bank delivered one of the best cost outcomes in the sector, with a JAWS ratio of 10.7 percentage points and a cost-to-income ratio of 46.7%. Our report credits this to expense discipline and a digital operating model where 94% of transactions are processed digitally, allowing the bank to grow with far less cost pressure than peers.
Elsewhere, the sector picture is less clean.
KCB is improving, but still sits at a critical turning point. Its NPL ratio improved to 16.9% from 19.2%, helped partly by the NBK separation, but the key question is whether that recovery continues in FY26. Co-operative Bank remains profitable, though weighed down by concentrated construction and real estate exposures. StanChart and Stanbic still stand out as balance sheet quality names, but both now face a lower-FX-income environment.
The bigger message is that investors may need to stop looking at Kenyan banks as one broad sector call. FY25 may be remembered as the year that split became impossible to ignore.
To learn more, Download the FY2025 Kenya Banking Sector Report (PDF) →
