The banking sector has maintained strong earnings growth despite easing interest-rate environment, with listed lenders riding on cost cutting to drive profitability.
Absa Bank Kenya and Family Bank Group reported higher profits in the first half of 2026 on the back of balance-sheet expansion, lower funding costs and tighter cost management.
The lenders tightened funding and operating costs with Absa Bank Kenya cutting its interest expense by 18 per cent to Sh6.2 billion in the first half of 2026, supported by growth in lower-cost transactional deposits.
This saw the lender post a profit after tax of Sh10.5 billion in the first half of the year.
The lender also kept operating expenses at Sh12.1 billion, describing the spending as disciplined investment in customer-focused transformation and digital innovation.
Its impairment charges fell by 4 percent to Sh3.1 billion, pointing to improved credit-risk management.
Absa Bank Kenya Interim managing director and CEO Yusuf Omari said despite a challenging operating environment, the Bank recorded strong second-quarter momentum, driven by disciplined execution, customer support and continued investment in long-term resilience.
“We are driving diversified growth through sector specialisation, strengthening capabilities in priority sectors, and pursuing operational excellence while unlocking new growth opportunities across our businesses,” added said Omari.
Absa’s total revenue declined slightly to Sh29.3 billion, reflecting the impact of lower interest rates and the bank’s decision to pass some of the benefits of cheaper funding to customers.
However, the lender maintained a strong 21.7 percent return on equity.
The bank offset pressure on revenue through lower funding costs. Its interest expense fell 18 per cent to Sh6.2 billion, supported by growth in transactional deposits, helping reduce its cost of funds even as total assets expanded to Sh558.1 billion.
Family Bank, in contrast, increased operating expenses by 11 per cent to Sh7.4 billion as it invested in technology, personnel and branch optimisation across its 97-branch network.
According to the lender the higher costs were part of its strategic plan, with income growth outpacing expenses.
This saw the recently listed lender’s profit jumped 62 per cent to Sh3.7 billion, from Sh2.2 billion a year earlier.
Net interest income rose 41 percent to Sh9.7 billion, helping drive a 62 percent increase in profit after tax to Sh3.7 billion.
The lender recorded a stronger expansion in both lending and deposits following its listing on the Nairobi Securities Exchange in June.
The bank’s total assets increased 24 percent to Sh238.9 billion, supported by increased lending to households, small businesses and commercial customers.
It disbursed Sh35.6 billion to retail and MSME customers during the period, alongside Sh15.2 billion to commercial clients.
The lending growth helped push Family Bank’s net interest income up 41 percent to Sh9.7 billion.
Customer deposits also increased by 20 percent to Sh180.2 billion, supported by the lender’s network optimisation strategy and growing customer base.
Family Bank chief executive Nancy Njau attributed the performance to disciplined execution of the lender’s 2025–2029 strategy, which places emphasis on expanding its customer base and growing its core businesses.
“Our strong first-half of the year results reflect the resilience of our business, disciplined execution and continued focus on our customers. We have strengthened the balance sheet, grown the income streams and maintained strong capital and liquidity positions, while continuing to invest in our people, technology and distribution network,” said Njau.
