The banking sector continues to demonstrate robust earnings growth, even in a declining interest-rate environment. Listed lenders are capitalizing on cost-cutting measures to enhance profitability.
In the first half of 2026, Absa Bank Kenya and Family Bank Group reported increased profits, driven by balance-sheet expansion, reduced funding costs, and effective cost management.
Absa Bank Kenya successfully reduced its interest expenses by 18% to Sh6.2 billion in the first half of 2026, thanks to a rise in lower-cost transactional deposits. This strategic move resulted in a profit after tax of Sh10.5 billion during the same period.
The bank maintained its operating expenses at Sh12.1 billion, framing this as a disciplined investment in customer-focused transformation and digital innovation. Additionally, its impairment charges decreased by 4% to Sh3.1 billion, reflecting enhanced credit-risk management.
Yusuf Omari, the Interim Managing Director and CEO of Absa Bank Kenya, highlighted the bank’s strong second-quarter performance despite a challenging operating landscape. This success stemmed from disciplined execution, customer support, and ongoing investments in long-term resilience.
“We are fostering diversified growth by specializing in various sectors, enhancing our capabilities in key areas, and striving for operational excellence while unlocking new growth opportunities across our businesses,” Omari emphasized.
Although Absa’s total revenue slightly declined to Sh29.3 billion due to lower interest rates and the bank’s decision to pass some benefits of cheaper funding to customers, it maintained an impressive return on equity of 21.7%.
The bank effectively countered revenue pressures by lowering funding costs, with its interest expense decreasing by 18% to Sh6.2 billion, aided by an increase in transactional deposits, even as total assets grew to Sh558.1 billion.
In contrast, Family Bank increased its operating expenses by 11% to Sh7.4 billion, investing strategically in technology, personnel, and branch optimization across its 97-branch network. The lender views these higher costs as part of its long-term strategic plan, with income growth surpassing expense increases.
As a result, Family Bank’s profit surged by 62% to Sh3.7 billion, up from Sh2.2 billion a year earlier. Net interest income increased by 41% to Sh9.7 billion, significantly contributing to the 62% rise in profit after tax.
The bank experienced robust growth in both lending and deposits following its recent listing on the Nairobi Securities Exchange in June. Total assets rose by 24% to Sh238.9 billion, fueled by increased lending to households, small businesses, and commercial clients. During this period, Family Bank disbursed Sh35.6 billion to retail and MSME customers and Sh15.2 billion to commercial clients.
This lending growth propelled Family Bank’s net interest income up by 41% to Sh9.7 billion. Furthermore, customer deposits grew by 20% to Sh180.2 billion, supported by the bank’s network optimization strategy and an expanding customer base.
Family Bank’s CEO, Nancy Njau, attributed the company’s performance to the disciplined execution of its 2025–2029 strategy, which emphasizes expanding its customer base and enhancing core businesses.
“Our strong results for the first half of the year reflect the resilience of our business, disciplined execution, and a steadfast focus on our customers. We have fortified our balance sheet, diversified our income streams, and maintained strong capital and liquidity positions, all while continuing to invest in our people, technology, and distribution network,” Njau stated.
