Nairobi Securities Exchange launches Banking Sector Index to track 11 lenders and deepen Kenya’s market liquidity and investor confidence.
Nairobi, Oct. 4 — The Nairobi Securities Exchange (NSE) has rolled out a Banking Sector Index, giving investors a sharper way to gauge Kenya’s most influential industry. The new benchmark was launched five months after the launch of a digital asset exchange, a blockchain-based platform for tokenising real-world assets.
It is expected to deepen market transparency and attract broader participation from local and foreign institutions.
Effective October 1 2025, the index follows all freely tradable shares of listed banks. It applies a market-capitalisation-weighted and float-adjusted methodology—an approach designed to mirror global best practice. Details appear in the official NSE release (PDF).
Broader, data-driven coverage
The index tracks 11 banking counters:
Absa Bank Kenya Plc, BK Group Plc, Diamond Trust Bank Kenya Ltd., Equity Group Holdings Plc, HF Group Plc, I&M Group Plc, KCB Group Plc, NCBA Group Plc, Stanbic Holdings Plc, Standard Chartered Bank Kenya Ltd., and Co-operative Bank of Kenya Ltd..
“This marks a milestone for Kenya’s capital markets,” said Frank Mwiti, chief executive officer of the NSE. “It underscores our commitment to innovation, strengthens investor confidence, and aligns us with the world’s leading exchanges.”
Mwiti added that the new measure will guide portfolio managers, improve market visibility, and serve as a foundation for additional products such as exchange-traded funds (ETFs) and sector-linked derivatives. Those instruments, he said, could debut as early as next year.
Banking sector drives liquidity
Kenya’s lenders remain the heartbeat of domestic trading. According to the Central Bank of Kenya (CBK), total banking assets rose 2.3 percent in the second quarter of 2025 to KSh 7.9 trillion (≈ $60.7 billion), up from KSh 7.7 trillion ($59.3 billion) in March.
The CBK Credit Officer Survey (Q2 2025 PDF) attributes the expansion to renewed private-sector lending and resilient deposit inflows.
Gross loans climbed to KSh 4.1 trillion ($32.1 billion), while customer deposits increased to KSh 5.9 trillion ($45.2 billion). Liquidity improved to 58.6 percent, well above the statutory 20 percent minimum. Capital adequacy also strengthened slightly to 20.4 percent, compared with 20.1 percent three months earlier.
“The lending momentum shows the second quarter was robust,” said Robert Ochieng, chief executive of Abojani Investment. “If this trajectory continues, the third and fourth quarters should deliver even better profitability for banks.”
Earnings momentum holds steady
Despite a high-interest-rate environment and currency volatility, Kenya’s lenders maintained earnings growth through the first half of 2025.
A study by Finance in Africa found that six of the eight largest banks—Equity Group, KCB, Absa, Co-operative Bank, I&M Group, and NCBA Group—posted average profit growth of 15 percent year-on-year.
I&M Group led the industry with a 36 percent jump in after-tax profit. It was followed by Equity Group at 17 percent and NCBA Group at 12.6 percent.
Absa Bank Kenya recorded 9.1 percent, while Co-operative Bank and KCB Group rose 8.3 percent and 8 percent, respectively.
By contrast, foreign-owned lenders such as Standard Chartered Bank Kenya and Stanbic Holdings saw profits fall 21 percent and 9 percent.
“The new index offers a clear barometer for investors,” Ochieng said. “It helps separate temporary price swings from fundamental sector strength.”
Toward product diversification
The Banking Sector Index is part of a larger NSE agenda to broaden investment options. Beyond tracking performance, it introduces analytical depth that can feed fund-management strategies. Consequently, more institutional investors may use the gauge as a benchmark for actively managed portfolios and passive index funds.
Analysts compare the initiative to international standards such as the S&P 500 Financials and FTSE 350 Banks indices, which attract billions of dollars in global capital. By building similar structures, the NSE aims to strengthen liquidity and align local regulation with global norms.
Mwiti emphasized that diversification is central to the exchange’s long-term vision. “This index not only highlights banking performance but also paves the way for new instruments that can drive inclusion and deepen liquidity,” he said.
Expanding beyond banking
Looking ahead, the NSE plans to introduce indices for manufacturing, energy, and utilities. The effort aligns with the Vision 2030 Capital Markets Master Plan, which seeks to raise market capitalisation to 50 percent of GDP by 2030.
Furthermore, the exchange hopes to attract regional cross-listings to cement Nairobi’s role as East Africa’s financial hub.
As Kenya continues to digitise trading infrastructure and roll out new instruments, investors will gain more granular exposure to the country’s growth sectors. The Banking Sector Index, therefore, stands as both a reflection of financial resilience and a signal of how innovation can transform African capital markets.