Co-op Bank ranked second nationally behind Equity Bank, which topped the rankings with KSh127.95 billion in new MSME loans.
Co-op Bank’s performance placed it ahead of KCB Bank, which advanced KSh41.10 billion, Family Bank at KSh31.84 billion and NCBA Bank, which lent KSh28.69 billion during the nine-month period.
The figures highlight Co-operative Bank’s growing contribution to financing small businesses in Kenya, which play a critical role in employment creation, entrepreneurship and economic development.
Co-op Bank Advances KSh60.26 Billion to Small Businesses
The KBA Q3 2026 MSME lending rankings place Co-operative Bank firmly among the country’s leading financial institutions supporting small businesses.
The KSh60.26 billion advanced by the lender represents approximately 14.2 per cent of the KSh424.67 billion in new MSME loans disbursed by the entire banking industry between January and September 2026.
The bank’s second-place ranking puts it ahead of several established financial institutions, demonstrating its significant presence in the country’s business financing market.
Access to such financing enables entrepreneurs to purchase inventory, meet working capital requirements, acquire equipment, expand operations and invest in new business opportunities.
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Top 10 Banks Lending to MSMEs in Kenya by Q3 2026
According to the Kenya Bankers Association, the following banks were the leading financiers of MSMEs as of September 2026:
- Equity Bank – KSh127.95 billion
- Co-operative Bank – KSh60.26 billion
- KCB Bank – KSh41.10 billion
- Family Bank – KSh31.84 billion
- NCBA Bank – KSh28.69 billion
- Stanbic Bank – KSh25.93 billion
- Absa Bank Kenya – KSh21.20 billion
- I&M Bank – KSh20.39 billion
- Kingdom Bank – KSh15.90 billion
- Diamond Trust Bank – KSh14.34 billion
The rankings demonstrate the significant contribution of commercial banks towards financing businesses across different sectors of Kenya’s economy.
Kenyan Banks Advance KSh424.67 Billion to MSMEs
The KBA report indicates that Kenyan banks provided KSh424.67 billion in new loans to MSMEs between January and September 2026.
This represents a 30 per cent increase compared with the KSh326.5 billion advanced during the whole of 2025.
The growth brings the banking industry closer to its KSh500 billion target for new MSME loans in 2026, putting the sector on course to record its highest annual lending to small businesses.
The increase also reflects growing demand for business financing and efforts by financial institutions to expand access to credit for entrepreneurs.
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Lower Interest Rates Support Growth in MSME Lending
The expansion in lending comes as the cost of borrowing continues to decline.
Average commercial bank lending rates decreased to 14.4 per cent in September 2026, compared with 17.2 per cent in November 2024.
Private sector credit growth also improved to 10.6 per cent in September 2026, up from 10.3 per cent in August.
Lower borrowing costs could encourage more businesses to seek financing for expansion, investment and day-to-day operations.
For MSMEs, access to affordable credit is particularly important because many small businesses depend on external financing to manage cash flow and take advantage of growth opportunities.
Banks Report Improved Loan Repayment Performance
The banking industry is also reporting improvements in loan repayment performance.
The gross non-performing loan (NPL) ratio declined to 13.9 per cent in September 2026, from 14.8 per cent in June and 17.6 per cent in August 2025.
The decline indicates an improvement in the proportion of borrowers meeting their loan repayment obligations.
Improved loan performance provides banks with greater confidence to expand credit facilities while managing the risks associated with lending to businesses.
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Focus Shifts to Financing More Small Businesses
Despite the significant growth in MSME lending, the banking industry faces the challenge of ensuring that financing reaches more businesses.
The next priority is to extend credit to enterprises borrowing from banks for the first time, as well as businesses that have traditionally struggled to access formal financing.
There is also a need for more long-term financing to help businesses purchase equipment, expand operations, invest in productive activities and create employment opportunities.
For Co-operative Bank, its KSh60.26 billion lending performance places it among the key financial institutions supporting this objective.
The wider banking industry will also need to ensure that increased lending translates into sustainable business growth and improved economic opportunities.
MSME Financing Remains Critical to Kenya’s Economic Growth
Micro, Small and Medium Enterprises remain an important part of Kenya’s economy, supporting millions of livelihoods through entrepreneurship, trade and employment.
Increased access to financing allows businesses to strengthen their operations, increase production, enter new markets and create jobs.
Co-operative Bank’s second-place ranking in the Q3 2026 KBA report highlights its contribution to this sector and reinforces its position as one of Kenya’s major MSME financiers.
Ultimately, the success of MSME financing will not only be measured by the amount of money banks lend, but also by the number of businesses reached and how effectively they use the financing to grow, create employment and contribute to the economy.
