Kenya’s equities market recorded a modest pullback during the week ending 20th March 2026, with all major indices closing lower. The decline was mainly driven by weakness in selected large-cap banking and consumer stocks, even as a few counters posted gains and helped cushion the broader market. Despite the weekly correction, the market remains in positive territory on a year-to-date basis, supported by strong gains recorded earlier in the quarter.

Turnover declined sharply from the previous week, reflecting softer trading activity, while foreign investors remained net sellers for the seventh consecutive week. On the corporate side, the reporting season continued to shape sentiment, with results from Equity Group, Standard Chartered Bank Kenya and Co-operative Group providing further insight into the banking sector’s earnings trajectory, asset quality trends, and shareholder returns.

Market Performance

The equities market traded lower during the week, with the NSE 10 declining by 1.0%, NASI by 0.9%, NSE 20 by 0.8%, and NSE 25 by 0.6%. The decline reflects a pause in momentum following the gains recorded in recent weeks, particularly in banking counters.

Even with the weekly pullback, year-to-date performance remains positive. The NSE 20 is up 16.6%, the NSE 25 has gained 14.2%, the NSE 10 is up 12.8%, and NASI has advanced 11.8%. This suggests that the current weakness is more consistent with short-term consolidation than a reversal in the broader market trend.

The weekly decline was mainly driven by losses in several large-cap counters. KCB Group declined by 4.1%, BAT Kenya by 2.1%, and EABL by 1.7%. These declines weighed on the market, particularly given the importance of these stocks in overall index performance.

That said, the downside was partly offset by gains in NCBA, which rose by 3.7%, and Absa Bank Kenya, which gained 2.4%. The selective nature of the market’s performance indicates that investor positioning remains active, with capital rotating within sectors rather than exiting the market entirely.

Banking Sector Performance

The banking sector index declined by 0.4%, closing at 241.3 from 242.2 the previous week. The sector’s performance was mixed, reflecting divergent reactions to earnings releases and valuation adjustments across counters.

The main drags on the banking index were KCB Group (-4.1%), Standard Chartered Bank Kenya (-1.5%), and DTB-K (-1.0%). These losses were partly offset by gains in NCBA (+3.7%) and Absa Bank Kenya (+2.4%).

The sector continues to benefit from improving asset quality, easing funding costs, and resilient credit growth. However, the mixed stock performance suggests that investors are increasingly differentiating between institutions based on the quality of earnings, balance sheet structure, provisioning trends, and dividend outlook rather than treating the sector as a single trade.

Market Activity and Foreign Investor Participation

Trading activity softened materially during the week. Equities turnover declined by 67.2% to USD 15.9 mn, from USD 48.3 mn recorded the previous week. As a result, year-to-date turnover now stands at USD 396.2 mn.

The sharp drop in turnover points to weaker market participation, likely reflecting investor caution following the recent rally and selective positioning around earnings announcements.

Foreign investors remained net sellers for the seventh consecutive week, recording net outflows of USD 2.7 mn, compared to USD 20.1 mn in the previous week. Although the pace of outflows moderated materially, foreign sentiment remains cautious. Year-to-date foreign net selling has now reached USD 62.1 mn, compared to USD 92.9 mn over a comparable period in 2025.

The continued foreign outflows remain a key headwind for the market. Nonetheless, the fact that year-to-date net selling is still below last year’s level suggests that domestic investors continue to provide an important degree of support.

Weekly Highlights

Equity Group FY’2025 Performance

Equity Group delivered a strong set of FY’2025 results, underpinned by robust earnings growth, improved asset quality, balance sheet expansion, and a resumed emphasis on shareholder returns.

Core earnings per share rose by 54.5% to Kshs 19.1, from Kshs 12.3 in FY’2024. This was driven by a 12.4% increase in total operating income to Kshs 217.7 bn and a 5.6% decline in total operating expenses to Kshs 125.6 bn. The improvement in earnings reflects both stronger revenue generation and significantly better cost containment.

Net interest income increased by 16.8%, supported by lower funding costs and stronger margin expansion. Interest expense declined by 24.2%, helping the bank’s cost of funds fall to 3.1% from 4.2%. This, together with relatively stable interest-earning asset growth, lifted the net interest margin to 7.8% from 7.0%.

Non-funded income also grew, rising by 6.7% to Kshs 90.8 bn, mainly due to higher foreign exchange trading income and stronger fee and commission income. This continued to support revenue diversification across the Group.

On the asset quality front, Equity reported a notable improvement. The gross NPL ratio declined to 11.5% from 13.6%, as gross non-performing loans fell by 9.8%, even as the gross loan book expanded by 6.6%. This points to a healthier credit environment and better portfolio quality management.

The balance sheet expanded by 9.2%, with total assets rising to Kshs 1.97 tn. Growth was supported by a 7.7% increase in net loans to customers and an 11.4% increase in government securities holdings. Customer deposits grew by 4.0%, while the loan-to-deposit ratio edged up to 60.6%, indicating continued lending expansion.

Importantly, the Group remains strongly capitalized, with both core and total capital ratios comfortably above statutory minimums. The Board recommended a dividend of Kshs 5.75 per share, translating to a dividend yield of 7.4% and a payout ratio of 30.2%.

Overall, Equity Group’s FY’2025 results point to a materially improved earnings profile driven by lower credit costs, stronger margins, and expanding business volumes. The bank remains well positioned to benefit from a more supportive domestic interest rate environment and improving credit demand.

Standard Chartered Bank Kenya FY’2025 Performance

Standard Chartered Bank Kenya reported a weaker FY’2025 earnings outcome, despite improved asset quality and a high dividend payout.

Core earnings per share declined by 38.0% to Kshs 32.9, from Kshs 53.1 in FY’2024. The decline was mainly due to a 16.5% fall in total operating income to Kshs 42.3 bn, alongside a 13.3% increase in operating expenses to Kshs 25.5 bn.

Both funded and non-funded income came under pressure. Net interest income declined by 13.1%, while non-interest income fell by 23.0%. The latter was particularly affected by a sharp reduction in foreign exchange trading income, which highlights the sensitivity of the bank’s revenue profile to market-related activity.

Interest income from loans and advances declined materially, though this was partly offset by higher income from government securities. Funding costs did improve, with interest expenses declining by 29.1%, but this was not sufficient to offset the overall drop in revenue. As a result, both the net interest margin and yield on interest-earning assets compressed.

The bank’s cost profile deteriorated during the year. Staff costs increased materially, driving total operating expenses higher. Consequently, the cost-to-income ratio rose sharply to 60.2%, from 44.3% in FY’2024, pointing to lower operating efficiency.

One of the key positives in the results was asset quality. The gross NPL ratio improved to 5.5% from 7.4%, as gross non-performing loans declined by 26.5%. Provisioning also fell, reflecting the healthier loan book.

On the balance sheet side, Standard Chartered recorded a contraction in total assets, largely due to a sharp reduction in cash and balances at the Central Bank. However, holdings of government securities increased, suggesting continued portfolio reallocation toward sovereign paper. Customer deposits declined by 4.1%, while net loans increased slightly, resulting in a higher loan-to-deposit ratio.

Despite weaker profitability, the bank declared a total dividend of Kshs 31.0 per share, comprising a final dividend of Kshs 23.0 and an interim dividend of Kshs 8.0. This translates to a dividend yield of 9.4% and a payout ratio of 94.2%, underscoring the bank’s continued commitment to shareholder distributions.

In summary, Standard Chartered’s FY’2025 results reflect a combination of weaker revenue generation and higher operating costs, partly offset by stronger asset quality and high dividend support. The results suggest a more challenging earnings environment relative to peers.

Co-operative Group FY’2025 Performance

Co-operative Group delivered a solid FY’2025 performance, supported by strong growth in funded income, improving asset quality, balance sheet expansion, and sustained shareholder returns.

Core earnings per share increased by 16.9% to Kshs 5.1, from Kshs 4.3 in FY’2024. This was driven by a 13.9% increase in total operating income to Kshs 91.9 bn, which outpaced the 11.4% rise in total operating expenses.

The main earnings driver was net interest income, which grew by 22.0% to Kshs 62.9 bn. Interest income increased on the back of stronger loan growth and higher returns from government securities. At the same time, interest expenses declined by 12.8%, resulting in a sharp fall in the cost of funds to 5.0% from 6.4%. This supported a notable improvement in the net interest margin to 9.2% from 8.3%.

Non-funded income was broadly flat, declining marginally by 0.3%, as weaker foreign exchange income offset modest growth in fees and commissions. As a result, the Group’s revenue mix shifted further toward funded income.

Operating costs increased during the year, mainly due to higher staff expenses and a rise in loan loss provisions. Even so, the cost-to-income ratio improved modestly to 56.6%, indicating that revenue growth remained sufficiently strong to absorb the rise in costs.

Asset quality improved slightly. The gross NPL ratio declined to 15.7% from 17.0%, as loan growth outpaced the increase in gross non-performing loans. Provision coverage also improved, supported by higher general provisions and lower interest in suspense.

The balance sheet expanded by 11.3%, with total assets rising to Kshs 827.4 bn. Growth was driven by increases in both net loans and government securities. Customer deposits grew by 13.4%, slightly faster than loan growth, resulting in a modest decline in the loan-to-deposit ratio.

The Board recommended a final dividend of Kshs 1.50 per share, in addition to an interim dividend of Kshs 1.00, bringing the total dividend to Kshs 2.50 per share. This translates to a dividend yield of 8.3% and a payout ratio of 49.3%.

Overall, Co-operative Group’s results point to a healthy earnings trajectory supported by strong net interest income growth, better funding efficiency, and continued balance sheet expansion.

Overall Market Assessment

The market’s performance during the week reflects a combination of modest index weakness, lower trading activity, and continued foreign investor caution. However, the underlying tone of the reporting season remains broadly supportive, particularly within the banking sector.

Equity Group and Co-operative Group reported strong earnings growth, improved asset quality, and credible dividend support, reinforcing the view that banks are benefiting from lower funding costs and improving business conditions. Standard Chartered, on the other hand, showed that revenue compression and rising cost pressure can still materially affect profitability, even where balance sheet quality remains strong.

Looking ahead, near-term market direction is likely to continue being shaped by three key factors: the pace of foreign investor outflows, the continuation of the earnings season, and the extent to which declining interest rates translate into stronger credit growth and improved valuations.

For now, the market remains in positive territory year-to-date, but the divergence between domestic support and foreign sentiment remains one of the most important themes to monitor.