Kenya's private sector credit stock reached an all-time high of KSh 4,148.45 Bn in March 2026, as year-on-year credit growth accelerated to 8.1%, the strongest pace in over two years.
- •The record stock surpasses the previous peak of KSh 3,920.40 Bn in January 2024, which the sector first crossed again in September 2025 after bottoming out at KSh 3,789.10 Bn.
- •The March 2026 figures, underpinned by record banking sector liquidity, declining lending rates, and broad-based demand across key economic sectors, marks the sixth consecutive month of all-time highs, extending a recovery from a -2.9% trough in January 2025.
- •The December 2025 survey had flagged personal and household and trade as the two sectors most likely to see NPL increases in Q1 2026, a signal that proved accurate.
Kenya's private sector credit growth has staged a sharp recovery from its January 2025 trough of -2.9%, the lowest reading in at least a decade, accelerating through 0.2% in March 2025, 2.0% in May 2025, 5.0% in September 2025, and 8.1% in March 2026, the strongest reading since January 2024.
The 14-month recovery of more than 1,100 basis points in the growth rate coincides with the CBK's 10-cut easing cycle, which compressed the benchmark rate from 13.0% in June 2024 to 8.75% in February 2026, and a parallel decline in average commercial bank lending rates from 17.2% in November 2024 to 14.7% in March 2026.
The Central Bank of Kenya's December 2025 Credit Officer Survey, which covered 38 commercial banks and one mortgage finance company, provided early signals of the acceleration. Some 86% of banks reported improved liquidity in Q4 2025, with total deposits rising 5.4% to KSh 6,274.10 Bn and gross loans growing 2.6% to KSh 4,369.60 Bn. Banks identified lending to the private sector as their top priority for deploying improved liquidity in Q1 2026, with 59% of respondents citing the CBK's rate cuts as the primary driver of increased credit demand.
Sectoral data for the year to December 2025 shows the recovery was broad but uneven. Building and construction recorded the strongest annual expansion, with the stock rising KSh 49.90 Bn to KSh 184.40 Bn, a 37.1% increase. Agriculture grew 28.9% to KSh 192.00 Bn, consumer durables rose 11.7% to KSh 479.60 Bn, and trade expanded 8.9% to KSh 739.40 Bn, the largest sector by stock.
Not all sectors participated with transport and communications contracting 10.1% to KSh 330.20 Billion, shedding KSh 37.00 Billion over the year, while real estate eased 2.1% to KSh 449.00 Billion and business services declined 3.9% to KSh 197.20 Billion. Manufacturing, the second largest sector at KSh 584.20 Billion, grew just 1.2%.
The recovery has been driven by a sustained decline in commercial bank lending rates, which averaged 14.7% in March 2026, down from 17.2% in November 2024, as the CBK's 10-cut easing cycle compressed the benchmark rate by 425 basis points. The full implementation of the revised Risk-Based Credit Pricing Model in March 2026 is expected to improve monetary policy transmission further.
Against the positive credit picture, the gross NPL ratio edged up to 15.6% in March 2026 from 15.4% in December 2025, the second increase recorded in 2026, driven by deterioration in the personal and household, trade, agriculture, and manufacturing sectors. T
The ratio nonetheless remains more than 200 basis points below the cycle peak of 17.6% in August 2025, the highest level on record. The improvement from peak to December 2025 was driven by a 6.4% decrease in gross NPLs alongside a 2.6% increase in gross loans. The CBK described the banking sector as stable and resilient, with a capital adequacy ratio of 20.0%, a liquidity ratio of 59.3% against a statutory minimum of 20%, and profit before tax rising to KSh 83.90 Bn in Q4 2025 from KSh 79.80 Bn in Q3 2025.
Banks have indicated they will intensify credit recovery efforts in Q1 2026, with trade at 82%, real estate at 81%, personal and household at 78%, and building and construction at 76% topping the list of sectors targeted for recovery intensification.
