African banks including Nigeria’s Access, Egypt’s CIB, and South Africa’s Nedbank are racing into Kenya for growth, but entrenched domestic lenders are making the market a tough place to turn deposits into profit, according to Reuters.
The challenge: Kenya’s banking sector is crowded and dominated by incumbents like Equity Group and KCB Group, which leverage large customer bases, regional reach, and strong mobile platforms.
While Nigerian banks are growing deposits fast — UBA Kenya’s deposits rose 334% to ₦180.3bn and Access Kenya’s to ₦136.99bn between 2021-2025 — converting that scale into earnings has been slow.
Specifically, Access Bank Kenya reported a loss after tax of ₦2.14bn ($1.47m) in H1 2025 despite ₦4.85bn operating income, dragged by ₦8bn in operational expenses. GTCO Kenya also saw its loan book shrink 51.6% even as deposits grew 164%.
The pattern shows “building scale before profitability”, with lending lagging deposit growth and competition from Safaricom’s M-PESA credit products adding pressure.
Analysts say it takes time to crack Kenya’s market where the top banks command low-to-mid teens market share, while newcomers like CIB hold just 0.3%.
For Nigerian lenders under CBN’s recapitalisation push, Kenya offers diversification and forex stability, but profits remain the missing piece.
Kenya’s appeal lies in its gateway role to the East African Community, a fast‑growing bloc expanding by at least 5% a year.
“It becomes hugely, hugely attractive,” said Kenny Fihla, CEO of South Africa’s Absa Bank which said last week it is increasing its stake in its Kenyan business to as much as 85% through a tender offer.
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African banks have been busy dealmaking as global giants such as Standard Chartered and Societe Generale exit smaller markets to focus on core ones such as Kenya, while a growing need to invest in technology has prompted deals to gain scale.
However, it takes time to achieve growth in Kenya’s crowded banking sector, which central bank data showed produced some $2 billion in annual pretax profit in 2024, as incumbents including Equity Group and KCB Group leverage large customer bases, regional reach and strong mobile platforms.
“Have we been as profitable as we would have wanted to be? I think one can always look in hindsight and say ‘should have grown faster, could have grown faster’,” said Tirus Mwithiga, CEO of CIB’s Kenyan business, adding that it remained confident given asset growth and profit improvements.
Kenya’s big banks command market shares in the low-to-mid teens, while second-tier lenders, such as Family Bank, are typically in the high single digits. There is also a long tail of smaller banks, including CIB, which entered Kenya six years ago by buying a small lender and holds a 0.3% market share.
“When you look at our concentration of 23 million customers, and a capital base of 350 billion shillings, we can outrun them, we can outperform them,” said Equity Bank CEO James Mwangi.
SLOWER GROWTH ELSEWHERE IN AFRICA
South Africa’s slow growth and mature sector are pushing its biggest banks to expand elsewhere.
Nedbank agreed earlier this year to acquire a majority stake in Kenya’s NCBA as part of its regional expansion, beating South African rival Standard Bank which operates in Kenya as Stanbic, to the prize, Kenyan banking officials told Reuters.
“The transaction is aligned with Nedbank’s long-term strategy to expand into high-growth markets across the continent,” Nedbank told Reuters.
NCBA and Standard Bank’s East Africa representatives declined to comment.
Nigeria’s Access bought National Bank of Kenya from KCB Group in a deal that was completed halfway through last year.
Kenya’s move to raise banks’ minimum capital from 1 billion shillings in 2024 to 10 billion by 2032 is expected to spur further consolidation in the East African country, which also appeals as a hub for travel and regional bank headquarters.
Relatively solid financial regulation, easy repatriation of dividends and the freely traded shilling add to the attraction.
Meanwhile, its large consumer market and advanced mobile money ecosystem, led by Safaricom’s M‑Pesa, underpin digital banking and customer growth in Kenya.
“The level of development of that tech and payment scene is probably among the most advanced in the whole continent,” said Jeremy Awori, the CEO of Ecobank, which operates in 34 African markets including Kenya.
ELECTION IN PROSPECT
But risks remain for incoming foreign banks, including Kenya’s high public debt, elevated non-performing loans and exposure to global shocks such as fuel price swings.
Kenya is also subject to political volatility and has a general election due in August 2027.
“Everybody is hoping and praying that goes smoothly and doesn’t become too disruptive to the economy,” CIB Kenya’s Mwithiga told Reuters.
Overall, executives interviewed by Reuters said the long-term outlook remains positive for banking in Kenya.
“If you’re a long-term investor … it is a market that has promise, it has growth, it has delivered high returns on equity over the last decade or so,” said Standard Chartered Kenya CEO Birju Sanghrajka.