Equity Bank has strengthened its position as Kenya’s leading financier of small businesses, accounting for nearly a third of the KES 424.67 billion in new MSME loans issued by commercial banks in the first nine months of 2026.
The latest industry figures released by the Kenya Bankers Association (KBA) show that Equity Bank advanced KES 127.95 billion to micro, small and medium enterprises (MSMEs) by the end of September, placing it significantly ahead of other lenders.
The bank’s performance comes as total industry lending to MSMEs increased by 30 per cent from KES 326.5 billion recorded during the same period in 2025.
Equity’s lending volume was more than twice the KES 60.26 billion advanced by Co-operative Bank, which ranked second, and exceeded the combined KES 101.36 billion disbursed by Co-operative Bank and KCB Bank.
KCB occupied third position with KES 41.10 billion, representing 9.68 per cent of total MSME financing.
Mid-Tier Banks Strengthen Competition
Beyond the leading three lenders, the figures reveal the growing contribution of other financial institutions towards financing Kenya’s small business sector.
Family Bank ranked fourth after extending KES 31.84 billion, followed by NCBA with KES 28.69 billion.
Stanbic Bank disbursed KES 25.93 billion, while Absa Bank Kenya and I&M Bank recorded KES 21.20 billion and KES 20.39 billion, respectively.
Kingdom Bank advanced KES 15.90 billion, while Diamond Trust Bank (DTB) completed the top ten with KES 14.34 billion.
The distribution highlights the competitive role of commercial banks in providing capital to businesses seeking to expand operations, manage working capital and invest in new opportunities.
Lower Borrowing Costs Encourage Business Financing
The growth in MSME lending comes against a backdrop of easing borrowing costs, which have improved the environment for businesses seeking credit
According to the industry data, average commercial bank lending rates declined to 14.4 per cent in September 2026, compared with 17.2 per cent in November 2024.
The reduction has coincided with an improvement in private sector credit growth, which increased to 10.6 per cent in September from 10.3 per cent in August.
The improving credit environment signals renewed demand for financing as entrepreneurs seek funds to support business activities and expansion.
Banks Record Better Loan Repayment Performance
Meanwhile, commercial banks are reporting improved loan repayment conditions, with the gross non-performing loan (NPL) ratio declining to 13.9 per cent in September 2026.
The ratio had stood at 14.8 per cent in June 2026 and 17.6 per cent in August 2025.
The improvement reflects better debt servicing among borrowers, alongside stronger business cash flows and credit risk assessment by financial institutions.
With KES 424.67 billion already disbursed, banks have moved closer to the industry’s KES 500 billion annual MSME lending target, highlighting the growing importance of small businesses in Kenya’s financial sector.