- NWDT Saccos recorded lower non performing loans in Q2.
- Reserves and core capital strengthened during the quarter.
- Earnings remained volatile despite improving financial indicators.
Kenya’s non-withdrawable deposit-taking Saccos (NWDT-Saccos) closed the second quarter of 2026 with improving asset quality and a stronger reserve position, even as earnings continued to swing sharply from one quarter to the next.
Non-performing loans, comprising substandard, doubtful and loss categories, fell to 7.99% of the loan book in June 2026, down from 8.18% in March. The improvement follows a rougher patch at the end of 2025, when the ratio stood at 6.44%, before climbing through the first quarter of the year.
Even with the recent dip, the figure remains above the SACCO Societies Regulatory Authority’s (SASRA) prudential threshold of under 5%, a gap that has persisted across every quarter tracked in the Authority’s latest soundness report.
Reserves recover after a weak December
Retained earnings and disclosed reserves as a share of core capital climbed to 80.07% in June, a marked recovery from the 59.45% recorded in the audited December 2025 figures and close to the 84.29% peak posted in September last year. Core capital itself grew to Ksh18.83 billion in June, up from Ksh17.46 billion in March and Ksh16.42 billion a year earlier.
Against total assets, core capital stood at 13.12% in June, well above the regulatory floor of 8%. Measured against total deposits, the ratio came in at 17.12%, more than triple the 5% minimum SASRA requires. Exposure to related entities also eased, with subsidiary and related-entity investments against core capital dropping to 41.29% in June from 46.83% in March, comfortably within the 50% limit.
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One indicator moved against the broader trend: non-earning assets as a proportion of total assets rose to 15.26% in June, up from 14.37% in March and well beyond the 10% ceiling set by the regulator, having stood at just 8.42% in December 2025.
Earnings remain the segment’s most volatile measure
Profitability told a less settled story. Yield on gross loans fell to 6.32% in June, down sharply from 13.20% in the audited December 2025 figures, though it had climbed from a low of 3.25% in March. Return on assets more than doubled over the same window, rising from 1.04% in March to 2.38% in June, yet still fell short of the 3.27% recorded in September 2025.
Cost pressures eased somewhat. Total expenses against total income dropped to 52.28% in June from 53.26% in March, a substantial improvement on the 80.46% posted in December, while operating expenses against financial income fell to 23.00% from 26.11% over the same period.
Liquidity stays well within bounds
Liquidity indicators held firm throughout the quarter. Liquid assets against short-term liabilities rose to 19.87% in June, up from 18.67% in March, far above the 10% regulatory minimum. Liquid assets as a share of total assets also increased, reaching 16.15% from 15.34% previously.
External borrowing continued to decline, falling to 1.11% of total assets in June from 1.26% in March, the lowest point across the six quarters under review and well within the 25% ceiling.
Loan book growth trails deposits
Structural indicators pointed to slightly slower loan growth relative to deposits. Gross loans as a share of total assets edged down to 75.68% in June from 75.94% in March, sitting just under SASRA’s target band of 70 to 80%. Gross loans against deposits also slipped below the 100% mark, falling to 98.77% from 99.78% the previous quarter.
Financial investments as a proportion of total assets declined to 10.05% in June from 10.65% in March. Dividends and interest paid on deposits against total income rose to 24.36% from 22.86%, though both figures remain far below the 51.28% spike recorded in the audited December 2025 numbers.
By Benedict Aoya
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