Kenya’s banking sector is under pressure as lenders rush to meet the Sh3 billion core capital requirement due by December 31, 2025.
According to December 2024 disclosures, 12 of the 39 banks were still below the threshold. Regulators have mapped a steep capital progression, rising to Sh5 billion in 2026 and eventually Sh1billion by 2029.
Bank statements released on Tuesday show regulators have set a steep progression for the next phase of banking reforms, with the minimum core capital rising to Sh5 billion in 2026, Sh6 billion in 2027, Sh8 billion in 2028, and finally Sh10 billion in 2029.
The new framework is meant to strengthen banks against shocks by ensuring institutions have the ability to absorb risks, and is anchored in the 2024 capital adequacy schedule.
The Banking Sector Capital and Risk-Weighted Assets Report (December 2024) provides a detailed snapshot of each lender’s position based on self-reported financial statements.
Kenya’s largest banks remain well above the 2025 requirement. KCB Bank Kenya Ltd, with core capital of Sh144.77 billion, and Equity Bank Kenya Limited, with Sh132.336 billion, top the sector.
Major tier-one banks also show strong buffers, including Co-operative Bank of Kenya at Sh114.794 billion, NCBA Bank Kenya PLC at Sh89.085 billion, and Absa Bank Kenya PLC at Sh72.351 billion.
However, several mid-tier and small banks remain far below the upcoming minimum.
A review of the December 2024 data shows lenders such as Credit Bank Ltd (Sh1.325 billion), UBA Kenya Bank Ltd (Sh1.492 billion), Access Bank PLC (Sh152 million), Premier Bank Limited (Sh2.507 billion), Bank of Africa (Sh3.156 billion), Guardian Bank (Sh3.48 billion) and Paramount Bank (Sh2.67 billion) in varying positions relative to the requirement.
Two banks remain in negative capital territory, Spire Bank Limited, with core capital of Sh96 million, and Consolidated Bank of Kenya, reporting Sh751 million.
These institutions may require significant restructuring or government intervention to comply with the 2025 threshold.
The data also highlights wide disparities in risk-weighted asset positions and capital adequacy indicators across the sector.
For example, Bank of India recorded a striking Core Capital/TRWA ratio of 84.5 per cent, while Guaranty Trust Bank (GT Bank) posted 60.1 percent.
In contrast, National Bank of Kenya, with Sh8.996 billion in core capital, reported a much lower 9 percent Core Capital/TRWA ratio, illustrating divergent risk exposures.
Institutions such as Bank of Baroda (Kenya) Limited, with Sh34.768 billion in core capital, show extremely strong buffers relative to size, evidenced by a 33.6 percent Core Capital/TRWA ratio.
Other smaller but adequately capitalised lenders include Habib AG Zurich, M-Oriental Commercial Bank, Guardian Bank, Victoria Commercial Bank, and Kingdom Bank, all reporting core capital above Sh2 billion and double-digit capital adequacy ratios.
With the 2025 deadline just a year ahead, financial analysts say the numbers reaffirm a likely wave of capital injections, shareholder restructuring, strategic mergers, or acquisitions, particularly among banks operating below the Sh3 billion threshold.
Regulators, however, have maintained that the objective is not to eliminate small banks but to ensure all institutions operate with sufficient capital strength as risk conditions evolve.
The December 2024 dataset concludes with a sector-wide tally of Sh989.239 billion in total core capital, Sh1.118 trillion in total capital, and Sh5.709 trillion in overall risk-weighted assets, reflecting a system that is strong at the top but uneven across its lower tiers.
