KCB Group ratings affirmed by Fitch with stable outlook

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KCB Group ratings affirmed

Highlights

KCB Group PLC and KCB Bank Kenya Limited had their Long-Term IDRs affirmed at 'B-' and National Long-Term Ratings at 'AA(ken)' with stable outlooks, reflecting limited sovereign support and moderate credit constraints.
KCB Group's regulatory non-performing loans ratio improved to 14.5% at end-H1 2026 from 16.2% at end-2025, with Stage 2 loans at 16% and loan loss allowance coverage at 79%.
KCB Bank's Fitch Core Capital ratio increased to 18.9% at end-H1 2026, while operating returns on risk-weighted assets averaged 4.8% for 2022-2025 and liquidity remains robust, mainly supported by customer deposits.

Rating action and key credit drivers

As reported by Fitch Ratings, KCB Group PLC and KCB Bank Kenya Limited have their Long-Term Issuer Default Ratings affirmed at 'B-', while their National Long-Term Ratings remain at 'AA(ken)', all with stable outlooks.

The agency says the ratings are driven by the group's standalone creditworthiness, reflected in Viability Ratings of 'b-'. It cites the concentration of operations in Kenya and material sovereign exposure relative to capital as key constraints, while KCB Bank's Long-Term IDR is also supported by a limited probability of government support through its Government Support Rating of 'b-'.

Fitch says the stable outlooks on the Long-Term IDRs mirror the outlook on Kenya's own Long-Term IDRs. It adds that KCB's National Long-Term Ratings remain below those of foreign-owned Kenyan banks that benefit from shareholder support.

KCB Group, a non-operating bank holding company, has its Viability Rating equalised with the group rating because of the absence of double leverage and high fungibility of capital and liquidity. KCB Bank also has its rating equalised with the group assessment, and represented 69% of group assets at the end of the first half of 2026.

Asset quality, capital and operating environment

Fitch forecasts Kenya's real GDP growth at 4.9% in 2026 and 5.1% in 2027, up from 4.6% in 2025. Inflation rises to 6.8% in September 2026 because of spillovers from the Iran conflict, but the agency expects it to remain within the Central Bank of Kenya's target range, supported by a stable exchange rate and government measures to limit higher fuel-related costs.

KCB Group remains the largest Kenyan banking group, with KCB Bank accounting for 18% of domestic banking sector assets at the end of 2025. The group also operates banking subsidiaries in six other East African countries, which together account for 30% of total assets and provide geographical diversification.

KCB Bank's holdings of Kenyan government fixed-income securities remain sizable at 174% of Fitch Core Capital at end-first half 2026, mainly in treasury bonds. Fitch says single-obligor and sector credit concentrations are moderate, while retail lending is high at 44% of gross loans at end-2025, largely through salary-assigned loans to public sector employees.

KCB Group's regulatory non-performing loans ratio declines to 14.5% at end-first half 2026 from 16.2% at end-2025, helped by repayments, write-offs and strong loan growth. Fitch expects the ratio to ease moderately further in the near term, although Stage 2 loans remain elevated at 16% of gross loans at end-2025 and loan loss allowance coverage stands at 79% of non-performing loans.

Profitability and capital remain supportive. Operating returns on risk-weighted assets average 4.8% between 2022 and 2025, while the Fitch Core Capital ratio edges up to 18.9% at end-first half 2026 from 18.7% at end-2025, and Fitch expects both metrics to stay broadly stable in the near term.

The group continues to rely mainly on customer deposits, with a high share of retail accounts and current and savings accounts supporting low funding costs. Fitch says liquidity remains healthy in both local and foreign currencies, while limited cross-border and wholesale debt reduces funding risk.

In our earlier coverage of rising sovereign borrowing risks in a higher-rate environment, we noted that persistent geopolitical tensions and elevated fiscal spending can squeeze governments’ fiscal headroom and worsen refinancing pressures. We also highlighted that emerging and frontier markets are especially exposed because debt-service costs tend to be high relative to narrower revenue bases, with energy- and food-price shocks adding to inflation and credit stress.

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