- Bad loans edged higher as DT Saccos posted stronger profits.
- Capital and liquidity buffers improved significantly in the quarter.
- Rising loan exposure remains a key risk for the sector.
Non-performing loans among Kenya’s deposit-taking (DT) Saccos edged higher in the quarter to June 2026, even as the segment posted stronger capital buffers and improved liquidity, according to the SACCO Societies Regulatory Authority’s (SASRA) latest soundness report.
The ratio of non-performing loans (NPLs) to gross loans for DT-Saccos rose to 6.56% in June 2026, up from 6.42% in March and above the 6.36% recorded in December 2025. While still within striking distance of SASRA’s prudential ceiling of below 5%, the ratio has drifted upward through most of the past year, having stood at 6.71% in March 2025 before dipping mid-year.
Provisioning against these bad loans also loosened slightly. NPLs net of provisions as a share of core capital climbed to 5.70% in June, from 5.04% in March, though this remains well below the 7.30% peak recorded in September 2025.
Capital position strengthens
On the capital side, DT-Saccos ended the quarter in a healthier position than a year earlier. Core capital rose to Ksh208.13 billion in June 2026, up from Ksh182.21 billion in June 2025. As a proportion of total assets, core capital stood at 18.82%, comfortably above the regulatory minimum of 10%, while core capital to total deposits came in at 26.86%, more than triple the 8% floor set by SASRA.
Institutional capital to total assets, a narrower measure of retained earnings and statutory reserves, stood at 12.58% in June, up from 11.79% in March and above the 8% minimum requirement.
Earnings pick up after a soft start to the year
Profitability improved markedly between March and June. Return on assets rose to 2.84% in June 2026 from just 1.53% in March, though it remains below the 3.17% posted in September 2025. Profitability, measured as net income before tax against total income, reached 30.55% in June, the highest recorded across the six quarters tracked in the report.
YOU MAY WANT TO READ:
Operating costs also eased relative to income. The cost-income ratio fell to 41.48% in June from 43.93% a year earlier, while non-interest expenses as a share of gross income dropped to 37.84%, its lowest point in the period under review.
Liquidity buffers well above requirement
DT-Saccos also strengthened their liquidity position considerably. The regulatory liquidity ratio, which must stay above 15%, stood at 81.68% in June 2026, up sharply from 75.95% in March and 67.88% a year earlier. Liquid assets as a proportion of total assets rose to 15.07%, continuing a steady climb from 12.39% in March 2025.
External borrowings, meanwhile, fell to 2.17% of total assets, remaining well within the 25% ceiling and marking the lowest level recorded across the period.
One measure moved in a less favourable direction: gross loans to total deposits, an indicator of how heavily Saccos are lending out member funds relative to what they hold, rose to 111.37% in June, up from 110.63% in March, though still below the 115.75% high recorded in December 2025.
By Benedict Aoya
Get more stories from our website: Sacco Review.
For comments and clarifications, write to: Saccoreview@
Kindly follow us via our social media pages on Facebook: Sacco Review Newspaper for timely updates
Stay ahead of the pack! Grab the latest Sacco Review newspaper!
