CBK decision to cut base lending rate triggers interest in bank stocks at NSE

THE Central Bank of Kenya’s decision to further cut the base lending rate by 25 basis points to nine per cent triggered investors interest in banking stocks in the week ended December 11.

Data from the weekly bulletin by the apex bank shows that banks denominated the top five gainers at the Nairobi bourse, led by KCB, which gained 4.82 per cent to close the week at Sh59.75. Others were Equity and Absa Bank, whose share prices gained 0.83 and 0.23 per cent, respectively.

Market analysts attribute this to sound monetary policies that have started to lower risks in the sector, with data pointing to easing loan defaults.

The ratio of gross non-performing loans to gross loans dropped to 16.5 per cent in November, down from 16.7 per cent in October and 17.6 per cent in August.

Average commercial banks’ lending rates declined to 14.9 per cent in November 2025 from 15 per cent in October, and 17.2 per cent in November 2024.

The soft monetary stance witnessed in the country for the past 14 months has also fuelled economic growth, pushing up profitability in the banking sector as witnessed in Q3 financial results.

For instance, KCB Group is the third most traded stock on the NSE over the past three months.  It has traded a total volume of 150 million shares—in 15,787 deals—valued at Sh8.66 billion over the period, with an average of 2.38 million traded shares per session. 

It began the year with a share price of Sh41.60 and has since gained 43.6 per cent on that price valuation, ranking it 29th on the NSE in terms of year-to-date performance. 

Last week, KCB received Sh19.5 billion ($150 million) financing from the African Development Bank (AfDB), allowing it to expand its lending, especially to women-led entities and green businesses. 

Equity Bank began the year with a share price of Sh48.30 and has since gained 25.3 per cent on that price valuation, ranking it 37th on the NSE in terms of year-to-date performance, while Absa has since gained 21.9 per cent on that price valuation, ranking it 41st on the NSE in terms of year-to-date performance.

Although Coop Bank was not among the top gainers for the week, the lender’s share price at the Nairobi bourse has gained 32.5 per cent on price valuation, closing the week at a flat of Sh21.80, having started the year at Sh16.45.

Generally, the bourse recorded low activity during the week under review, with all market indicators dropping. The NASI, NSE 25 and NSE 20 share price indices decreased by 2.92 per cent, 1.80 per cent and 2.27 per cent, respectively.

Market capitalization also decreased 2.92 per cent, while equity turnover and total shares traded also increased by 78.5 per cent and 45.06 per cent, respectively.

In the money market, the Treasury bill auction of December 11 received bids totalling Sh32.6 billion against an advertised amount of Sh24 billion, representing a performance of 135.7 per cent.

This is despite Interest rates on the 91-day and 182-day Treasury bills stagnating while rates on the 364-day Treasury bill declined.

Bond turnover in the domestic secondary market increased by 16.03 per cent to Sh57.4 billion compared to Sh49.5 billion reported last in the previous week.