Equity Bank Leads Kenya MSME Lending With KSh127.95 Billion in First Nine Months

The Kenya Bankers Association reports that commercial banks disbursed KSh424.67 billion in new loans to micro, small and medium enterprises (MSMEs) between January and September 2026, a 30 per cent rise from the KSh326.5 billion recorded for the same period in 2025.

The association also notes that the industry is nearing its annual target of KSh500 billion, having achieved about 84.9 per cent of the goal by the end of September.

Equity Bank emerged as the leading MSME lender, providing KSh127.95 billion in new MSME credit, which represents roughly 30.13 per cent of total new MSME financing in the period.

Its disbursement was more than double the KSh60.26 billion issued by Co-operative Bank of Kenya and more than three times the KSh41.10 billion supplied by KCB Bank, according to the association’s data.

Family Bank ranked fourth with KSh31.84 billion in new MSME loans, while NCBA, Stanbic Bank, Absa Bank Kenya, I&M Bank, Kingdom Bank and Diamond Trust Bank completed the top ten lenders.

The association attributes the expansion in MSME lending partly to lower borrowing costs, noting that average commercial bank lending rates fell to 14.4 per cent in September 2026 from 17.2 per cent in November 2024.

Private sector credit growth improved to 10.6 per cent in September 2026, up from 10.3 per cent in August, reflecting growing confidence among businesses.

The Kenya Bankers Association further reports that the gross non-performing loan ratio declined to 13.9 per cent in September 2026, down from 14.8 per cent in June 2026 and 17.6 per cent in August 2025, indicating better loan repayment performance.

It says the improvement stems from stronger credit risk assessment by banks and healthier cash flows as supply-chain challenges and inflationary pressures ease.

If the current momentum continues, the banking sector could meet its KSh500 billion MSME lending target, leaving KSh75.33 billion to be disbursed in the final quarter of 2026, underscoring the sector’s role in supporting employment, entrepreneurship and economic activity.