(NAIROBI, KENYA) – Kenya’s regulated SACCO sector recorded a rise in non-performing loans to an estimated KES 65.3 billion in the second quarter of 2026, even as the industry’s gross loan book climbed to KES 971.59 billion, according to the SACCO Societies Regulatory Authority (SASRA). The bad loans figure amounts to approximately $506 million / £400 million / €459 million at current exchange rates, while the total credit book stands at about $7.53 billion / £5.95 billion / €6.83 billion.
The latest Quarterly Statistical and Soundness Report by SASRA shows that the sector’s gross loan book stood at KES 971.59 billion in June, up from KES 950.93 billion in March. This was 10.21% higher than the KES 881.62 billion recorded in June 2025.
The expansion in lending has been accompanied by deterioration in asset quality among deposit taking Saccos, which account for the bulk of the sector’s loan portfolio. The ratio of non-performing loans to gross loans among deposit taking Saccos increased from 6.42% in March to 6.56% in June.
For deposit taking SACCOs, which held gross loans of KES 862.94 billion in June 2026, non-performing loans stood at 6.56% of the loan book. Applying the reported ratio to the loan balance gives an estimated KES 56.63 billion ($439 million / £347 million / €398 million) in bad loans.
Among non-withdrawable deposit taking SACCOs, gross loans stood at KES 108.65 billion, while the non-performing loan ratio was 7.99%, translating to an estimated KES 8.68 billion ($67 million / £53 million / €61 million) in non-performing loans.
This was above the 6.36% recorded at the end of 2025 and remained above SASRA’s prescribed benchmark of less than 5%. The increase means that the proportion of loans that had fallen into non-performing status continued to exceed the regulator’s preferred threshold, despite the sector recording growth in assets, deposits and income.
SASRA’s data shows deposit taking Saccos’ total assets rose from KES 1.071 trillion in March to KES 1.106 trillion in June, while deposits increased from KES 763.52 billion to KES 774.83 billion over the same period. Their reserves also grew from KES 226.01 billion to KES 239.33 billion. Total assets of KES 1.106 trillion equal about $8.57 billion / £6.78 billion / €7.78 billion.
During the quarter, Saccos disbursed KES 132.09 billion across tracked economic sectors, representing a 16.08% increase from KES 113.79 billion in June 2025. The quarterly disbursement amounts to about $1.02 billion / £810 million / €929 million.
Trade received KES 19.03 billion, while education attracted KES 27.83 billion and agriculture KES 25.04 billion. Land and housing accounted for KES 32.10 billion. The lending data shows a particularly strong increase in credit to trade, which rose 26.68% year on year, while education lending increased 26.53% and agriculture grew 19.79%. Human health recorded the fastest growth among the listed sectors, with lending rising 36.15% year on year to KES 3.62 billion.
For non-withdrawable deposit taking Saccos, asset quality remained weaker than the regulatory threshold, although the non-performing loan ratio improved slightly during the quarter. The ratio fell from 8.18% in March to 7.99% in June, but remained well above the prescribed level of below 5%. Non-earning assets also rose from 14.37% of total assets to 15.26% during the period, against a benchmark of below 10%.
Despite the asset quality concerns, the sector maintained relatively strong capital and liquidity positions. Deposit taking Saccos’ core capital to total assets ratio stood at 18.82% in June against a regulatory minimum of 10%, while their regulatory liquidity ratio rose to 81.68% from 75.95% in March.