Commercial banks in Kenya extended a record KSh99.4 billion in new loans during September, the highest monthly figure recorded in at least five years.

The Central Bank of Kenya (CBK) said the amount eclipses the previous peak of KSh88.8 billion set in May 2026.

Private-sector credit growth for the month was 10.6 per cent, the strongest pace since February 2024.

Average commercial-bank loan interest rates fell to 14.4 per cent in September, down from a November peak of 17.2 per cent, improving affordability for borrowers.

The decline in rates occurred even though the CBK paused its benchmark-rate cuts in February, and banks have indicated that further reductions may be possible in the coming months.

By contrast, absolute credit flows turned negative in periods of contraction, such as January 2025 when they fell by KSh49.2 billion, the lowest level in the five-year cycle, and private-sector credit growth registered a 2.9 per cent decline.

“Growth in commercial banks’ lending to the private sector remained strong at 10.6 per cent in September 2026 compared to 10.3 per cent in August 2026 and a 2.9 per cent contraction in January 2025,” the CBK said.

The central bank added that credit to key sectors—including trade, building and construction, agriculture, finance and insurance, and consumer durables—remained robust, reflecting heightened demand.

A CBK credit survey to June 2026 highlighted steady perceived demand across most economic sectors but noted an increase in trade and personal-household credit, driven mainly by greater working-capital needs.

The recovery in private-sector credit followed substantial cuts to the Central Bank Rate, which fell to the current 8.75 per cent from a high of 13 per cent in August 2024, though the impact was delayed by a lag in monetary-policy transmission.

Last week the CBK left its benchmark rate unchanged at 8.75 per cent, stating that the level should anchor inflation expectations and support economic growth, including the credit-growth rebound.

The authority linked the strong 11.3 per cent expansion of broad money (M3) in September to the improved private-sector credit performance.

The surge in lending also helped reduce the banking sector’s non-performing loan ratio, which fell to a 44-month low of 13.9 per cent in September 2026.