NAIROBI, Kenya – Kenya’s commercial banks saw their total assets decline for the first time in over two decades, falling 1.6 per cent to Sh7.6 trillion in 2024, according to the Kenya Bankers Association (KBA).
The contraction follows more than 20 years of continuous growth, which began in 2002 when assets rose 4.9 per cent to Sh456.7 billion.
The only other decline since 2001 was in that year, largely due to the liquidation of Trust Bank.
KBA attributed the 2024 decline to challenging economic conditions and an unstable macroeconomic environment.
Large and medium-sized banks, which dominate industry assets, saw their total assets shrink by 3.5 per cent and 17.4 per cent, respectively, while small banks bucked the trend, growing their asset base to Sh576 billion by focusing on niche markets.
The Central Bank of Kenya (CBK) explained that the reduction was driven by lower loans and advances, placements, other assets, and balances held at the central bank.
Loans and advances as a share of total assets fell to 48.1 per cent from 49.4 per cent in 2023, while investments in government securities increased to 27.8 per cent, reflecting a more cautious approach to risk.
Net loans and advances dropped to Sh4.1 trillion from Sh4.2 trillion in 2023, while deposit growth slowed sharply to 1.23 per cent from 15.1 per cent the previous year, ending 2024 at Sh5.81 trillion.
KBA highlighted persistently high credit risk as a key factor behind cautious lending.
The gross ratio of non-performing loans to total loans remained near a two-decade high at 16.4 per cent in December 2024, slightly improving from 16.7 per cent in September. High borrowing costs were cited as a main driver of elevated defaults.
In response, CBK has cut its benchmark rate seven times since August 2024, lowering it by 3.5 percentage points from a peak of 13 per cent to 9.5 per cent earlier this month, aiming to ease the cost of borrowing and stimulate lending.
