Investment Updates:

• Weekly Rates: Cytonn Money Market Fund closed the week at a yield of 11.08% p.a. To invest, dial *809# or download the Cytonn App from Google Play store here or from the Appstore here; 
• We continue to offer Wealth Management Training every Tuesday, from 7:00 pm to 8:00 pm. The training aims to grow financial literacy among the general public. To register for any of our Wealth Management Trainings, click here. If interested in our Private Wealth Management Training for your employees or investment group, please get in touch with us through wmt@cytonn.com; 
• Cytonn Asset Managers Limited (CAML) continues to offer pension products to meet the needs of both individual clients who want to save for their retirement during their working years and Institutional clients that want to contribute on behalf of their employees to help them build their retirement pot. To more about our pension schemes, kindly get in touch with us through pensions@cytonn.com;

Hospitality Updates:

• We currently have promotions for Staycations. Visit com/offers for details or email us at sales@cysuites.com;

Money Markets, T-Bills Primary Auction:

This week, T-bills were oversubscribed for the third consecutive week, with the overall subscription rate coming in at 255.9% higher than the subscription rate of 145.7%, recorded the previous week. Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 37.7 bn against the offered Kshs 18.2 bn, translating to a subscription rate of 470.9%, higher than the subscription rate of 228.0%, recorded the previous week. The subscription rate for the 182-day paper Increased significantly to 185.7% from 89.9% recorded the previous week, while that of the 364-day paper increased to 154.1% from 135.6% recorded the previous week. The government accepted a total of Kshs 57.6 bn worth of bids out of Kshs 71.7 bn bids received, translating to an acceptance rate of 80.4%. The yields on the government papers were on a downward trajectory with the yields on the 91-day paper decreasing the most by 0.03 bps to 8.77% from 8.78 % recorded the previous week. The yields on the 182-day paper decreased by 0.02 bps to 8.99 % from 9.00% while that of the 364-day paper decreased marginally by 0.09 bps to remain relatively unchanged at 9.04% recorded the previous week.

The chart below shows the yield growth rate for the 91-day paper from August 2025 to date:

The chart below shows the performance of the 91-day, 182-day and 364-day papers from August 2024 to August 2026:

The chart below compares the overall average T-bill subscription rates obtained in 2023, 2024, 2025 and 2026 Year-to-date (YTD):

Money Market Performance:

In the money markets, 3-month bank placements ended the week at 9.0% (based on rates offered by various banks). The yields on the government papers were on a downward trajectory with the yields on the 91-day paper decreasing the most by 0.3 bps to 8.77% from 8.78% recorded the previous week, while that of the 364-day paper decreased marginally by 0.09 bps to remain relatively unchanged at 9.04% recorded the previous week. The yield on the Cytonn Money Market Fund remain unchanged at 11.08% recorded the previous week, while the average yields on Top 5 Money Market Funds increased by 6.2 bps to 10.9% from 10.8% recorded the previous week.

The table below shows the Money Market Fund Yields for Kenyan Fund Managers as published on 21^st August 2026:

Source: Business Daily

Liquidity:

During the week, liquidity in the money markets tightened with the average interbank rate increasing by 0.1 bps relatively unchanged at 8.8% recorded last week, partly attributable to government payments that offset tax remittances. The average interbank volumes traded decreased by 6.2% to Kshs 17.6 bn from Kshs 18.8 bn recorded the previous week. The chart below shows the interbank rates in the market over the years:

Kenya Eurobonds:

During the week, the yields on the Eurobonds were on an upward trajectory with the yield on the 13-year Eurobond issued in 2021, increasing the most by 16.9 bps to 8.1% from 7.9% recorded the previous week. The table below shows the summary performance of the Kenyan Eurobonds as of 20^th August 2026:

Cytonn Report: Kenya Eurobonds Performance
	2018		2019	2021	2024
Date	10-year issue	30-year issue	12-year issue	13-year issue		7-year issue
02-Jan-26	6.1%	8.8%	7.2%	7.8%		7.1%
03-Aug-26	7.0%	9.0%	8.0%	8.5%		7.7%
13-Aug-26	6.6%	8.9%	7.5%	7.9%		7.3%
14-Aug-26	6.6%	8.9%	7.5%	8.0%		7.3%
17-Aug-26	6.6%	9.0%	7.6%	8.0%		7.4%
18-Aug-26	6.7%	9.0%	7.6%	8.1%		7.4%
19-Aug-26	6.6%	9.0%	7.5%	8.0%		7.4%
20-Aug-26	6.6%	9.0%	7.6%	8.1%		7.4%
Weekly Change	0.0%	0.2%	0.1%	0.2%		0.1%
MTD Change	(0.4%)	0.0%	(0.4%)	(0.4%)		(0.4%)
YTD Change	0.5%	0.2%	0.4%	0.3%		0.3%

Source: Central Bank of Kenya (CBK) and National Treasury

Kenya Shilling:

During the week, the Kenya Shilling depreciated against the US Dollar by 18.6 bps to Kshs 129.5 from Kshs 129.2 recorded the previous week. On a year-to-date basis, the shilling has depreciated by 32.5 bps against the dollar, as compared to the 22.9 bps appreciation recorded in 2025.

We expect the shilling to be supported by:

1. Diaspora remittances standing at a cumulative USD 4,986.9 mn in the twelve months to July 2026, slightly lower than the USD 5,079.9 mn recorded over the same period in 2025. These have continued to cushion the shilling against further depreciation. In the July 2026 diaspora remittances figures, North America remained the largest source of remittances to Kenya accounting for 51.6% in the period,

2. Improved forex reserves currently at USD 15.2 bn (equivalent to 6.3-months of import cover), which is above the statutory requirement of maintaining at least 4.0-months of import cover and above the EAC region’s convergence criteria of 4.5-months of import cover.

The shilling is however expected to remain under pressure in 2026 as a result of:

1. An ever-present current account deficit which widened to 3.0% of GDP in the 12 months to June 2026 compared to 1.9% of GDP in a similar period in 2025 and,

2. The need for government debt servicing, continues to put pressure on forex reserves given that 54.8% of Kenya’s external debt is US Dollar-denominated as of June 2026.

3. Rising geopolitical tensions in the Middle East, which could exert pressure on the shilling through higher global oil prices and increased uncertainty in international markets. Given that Kenya is a net importer of petroleum products, any sustained increase in oil prices would widen the import bill, increase demand for US Dollars, and consequently put depreciation pressure on the shilling

Kenya’s forex reserves decreased marginally by 0.1% during the week to remain relatively unchanged from USD 15.2 bn recorded the previous week, equivalent to 6.3 months of import cover, and above the statutory requirement of maintaining at least 4.0-months of import cover.

The chart below summarizes the evolution of Kenya's months of import cover over from August 2024 to August 2026:

Weekly Highlights

1. Exchequer Highlight July 2026

The National Treasury gazetted the revenue and net expenditures for the first month of FY’2026/2027, ending 31^st July 2026, highlighting that the total revenue collected as at the end of July 2026 amounted to Kshs 229.1 bn, equivalent to 7.7% of the original estimates of Kshs 2,985.7 bn for FY’2026/2027 and is 92.1% of the prorated estimates of Kshs 248.8 bn. Below is a summary of the performance:

The key take-outs from the release include;

1. Total revenue collected as at the end of July 2026 amounted to Kshs 229.1 bn, equivalent to 7.7% of the original estimates of Kshs 2,985.7 bn for FY’2026/2027 and is 92.1% of the prorated estimates of Kshs 248.8 bn. Cumulatively, tax revenues amounted to Kshs 195.3 bn, equivalent to 6.8% of the original estimates of Kshs 2,858.7 bn and 82.0% of the prorated estimates of Kshs 238.2 bn,

2. Total financing amounted to Kshs 138.3 bn, equivalent to 6.3% of the original estimates of Kshs 2,191.7 bn and is equivalent to 75.7% of the prorated estimates of Kshs 182.6 bn. Additionally, domestic borrowing amounted to Kshs 138.3 bn, equivalent to 8.8% of the original estimates of Kshs 1,568.1 bn and is 105.8% of the prorated estimates of Kshs 130.7 bn.

3. The total expenditure amounted to Kshs 315.1 bn, equivalent to 6.1% of the original estimates of Kshs 5,177.5 bn, and is 73.0% of the prorated target expenditure estimates of Kshs 431.5 bn. Additionally, the net disbursements to recurrent expenditures came in at Kshs 142.8 bn, equivalent to 8.3% of the original estimates of Kshs 1,713.6 bn and are equivalent to 100.0% of the prorated estimates of Kshs 142.8 bn,

4. Consolidated Fund Services (CFS) Exchequer issues came in at Kshs 121.6 bn, equivalent to 4.7% of the original estimates of Kshs 2,563.0 bn, and are 56.9% of the prorated amount of Kshs 213.6 bn. The cumulative public debt servicing cost amounted to Kshs 113.8 bn which is 4.9% of the original estimates of Kshs 2,315.9 bn and is 58.9% of the prorated estimates of Kshs 193.0 bn. Additionally, the Kshs 113.8 bn debt servicing cost is equivalent to 49.7% of the actual cumulative revenues collected as at the end of July 2026. The chart below shows the debt servicing cost to revenue ratio over the period;

5. Total borrowings as at the end of July 2026 amounted to Kshs 138.2 bn, equivalent to 6.3% of the original estimates of Kshs 2,180.5 bn for FY’2026/2027 and are 76.1% of the prorated estimates of Kshs 181.7 bn. The cumulative Domestic Borrowing of KShs. 1,568.1 comprises of Net Domestic Borrowing KShs. 919.4 and Internal Debt Redemptions (Roll-overs) KShs. 648.8.

2. August 2026 Inflation Projection

We are projecting the y/y inflation rate for August 2026 will remain within the range of 6.3%-6.5%, mainly on the back of:

1. Declining Diesel Prices in August 2026 - The Energy and Petroleum Regulatory Authority (EPRA) reduced the maximum retail price of diesel by Kshs 5.0 per litre, from Kshs 222.9 to Kshs 217.9 in Nairobi, effective from 15 August to 14 September 2026. Super Petrol and Kerosene prices remained unchanged at Kshs 214.0 and Kshs 191.4 per litre, respectively, following Kshs 938.0 mn in Government stabilization support. The reduction in diesel prices likely provides some relief to transport, agriculture, manufacturing and logistics costs, although the impact on the August inflation print is likely to be gradual given that the lower prices only took effect midway through the month.

2. Stable Exchange Rate Conditions - The Kenya Shilling remained broadly stable against the US Dollar during August. The stability of the shilling should help contain the domestic cost of imported fuel, food and other intermediate goods, particularly against a backdrop of elevated global commodity prices.

3. Continued Pause in Rate Cuts -The Monetary Policy Committee maintained the Central Bank Rate (CBR) at 8.75% at its August 2026 meeting. The continued pause in the rate-cutting cycle should help contain demand-side inflationary pressures and anchor inflation expectations. This provides a supportive backdrop for a gradual moderation in inflation, although monetary policy is less effective against the current supply-side pressures arising from food and energy prices.

We, however, expect inflation to face upward pressure from :

1. Rising Super Petrol Landed Costs and Broad-Based International Price Increases - The average landed cost per cubic metre of Super Petrol increased by 7.0% to USD 948.9 in July 2026 from USD 886.9 in June 2026, even as Diesel and Kerosene landed costs declined. Separately, EPRA's international price benchmarks rose across all three products in July 2026, with Super Petrol, Diesel and Kerosene increasing by 8.9%, 13.2% and 11.8%, respectively, from June levels. While these two series are not directly comparable, the broad-based rise in the international benchmark points to building cost pressure in the pipeline that presents an upside risk to fuel prices in subsequent pricing cycles.

2. Rising Electricity Costs in August 2026 - Electricity costs increased in August following EPRA's latest tariff adjustments, with the Fuel Energy Cost Charge rising to Kshs 3.5 per kWh, while the Foreign Exchange Fluctuation Adjustment stood at Kshs1.2 per kWh and the WRMA levy at Kshs 0.015 per kWh. The three adjustments amount to Kshs 4.7 per kWh for August meter readings. This increase adds some pressure to household and business operating costs.

3. Geopolitical Risk to Global Oil Prices - International crude prices climbed to a two-month high above USD 86.1 per barrel this week, rising by 5.7% w/w from USD 82.0, as the unresolved US-Iran standoff over the Strait of Hormuz continues to threaten global supply, adding near-term upside risk on top of the broad-based rise already recorded in international petroleum benchmarks in July. Separately, US-brokered talks with Russian and Ukrainian negotiators opened in Saudi Arabia this week aimed at ending the Russia-Ukraine war; a resolution could ease sanctions on Russian energy exports and pull oil prices lower, but no agreement on territorial terms has been reached, leaving the near-term risk skewed to the upside.

Going forward, we expect inflationary pressures to remain within the CBK's target range of 2.5%-7.5%, with headline inflation projected to range between 6.3%-6.5% in August 2026. This is supported by the CBR holding at 8.75% during the August meeting and a Diesel price cut that eases transport and production costs. This is offset by rising electricity costs following EPRA's August tariff adjustments, a broad-based rise in international petroleum prices in July, and near-term geopolitical risk to global oil prices from the ongoing US-Iran standoff over the Strait of Hormuz. On balance, our August inflation projection stands at 6.3%-6.5%.

Rates in the fixed income market have declined MTD, reversing the recent upward trend. The decline comes despite the CBK's decision to pause its rate-cutting cycle at 8.75%, with inflation remaining elevated at 6.5% but within the CBK's target range. The government is 289.1% ahead of its prorated net domestic borrowing target of Kshs 136.4 bn, having a net borrowing position of Kshs 394.3 bn (inclusive of T-bills). We expect investors to maintain a preference for short to medium-term papers as they monitor the pace of government issuance and the path of inflation before committing further out on the curve, with the yield curve likely to remain under upward pressure rather than stabilize, at least until the inflation trajectory becomes clearer.

Market Performance:

During the week, the equities market was on an upward trajectory, with NSE 10, NSE 25, NASI and NSE 20 gaining by 3.2%, 3.0%, 2.8% and 2.4% respectively taking the YTD performance to gains of 35.2%, 34.8%, 33.6% and 30.6% respectively for NSE 10, NSE 20, NSE 25 and NASI respectively. The week-on-week equities market performance was mainly driven by gains recorded by large cap stocks such as DTB-K, BAT, and KCB of 12.5%, 7.8% and 7.2% respectively. However, the performance was weighed down by losses recorded by large cap stocks such as Co-operative, Standard Chartered and Stanbic Bank of 5.1%, 2.4% and 1.3% respectively;

During the week, the banking sector index increased by 2.9% to 284.5 from the 276.6 recorded the previous week. This is attributable to gains recorded by large cap stocks such as DTB-K, KCB, and Equity of 12.5%, 7.2% and 4.5% respectively. However, the performance was weighed down by losses recorded by large cap stocks such as Co-operative, Standard Chartered and Stanbic of 5.1%, 2.4% and 1.3% respectively;

During the week, equities turnover increased by 219.0% to USD 96.1 mn from USD 30.1 mn recorded the previous week, taking the YTD total turnover to USD 2,767.0 mn. Foreign investors remained net sellers for the sixth consecutive week with a net selling position of USD 12.5 mn, from a net selling position of USD 9.1 mn recorded the previous week, taking the YTD foreign net selling position to USD 129.3 mn, compared to a net selling position of USD 92.9 mn recorded in 2025.

The market is currently trading at a price to earnings ratio (P/E) of 8.0x, 28.4% below the historical average of 11.2x, and a dividend yield of 5.9%, 1.2% points above the historical average of 4.7%. Key to note, NASI’s PEG ratio currently stands at 1.0x, an indication that the market is fairly valued relative to its future growth. A PEG ratio greater than 1.0x indicates the market may be overvalued while a PEG ratio less than 1.0x indicates that the market is undervalued.

The charts below indicate the historical P/E and dividend yields of the market:

Universe of Coverage:

Weekly Highlights

1. Family Bank H1’2026 Financial Performance

During the week, Family Bank released their H1’2026 financial results, recording a 61.8% increase in profit after tax to Kshs 3.7 bn in H1’2026, from Kshs 2.3 bn in H1’2025;

Key Take-Outs:

1. Increased earnings - Core earnings per share (EPS) increased by 27.0% to Kshs 2.2 in H1’2026 from Kshs 1.8 in H1’2025, driven by the 25.4% growth in total operating income to Kshs 12.1 bn from Kshs 9.6 bn in H1’2025, but was however weighed down by the 10.7% increase in total operating expenses to Kshs 7.4 bn from Kshs 6.7 bn.

2. Decline in asset quality – The bank’s asset quality declined, with the gross NPL ratio increasing by 1.2% points to 14.7% in H1’2026 from 13.5% in H1’2025, as gross loans increased by 9.2% to Kshs 123.1 bn in H1’2026 from Kshs 112.7 bn in H1’2025, outpaced by the 19.2% increase in gross non-performing loans to Kshs 18.1 bn in H1’2026 from Kshs 15.2 bn in H1’2025.

3. Expanded Balanced sheet - The balance sheet recorded an expansion, with total assets increasing by 23.9% to Kshs 238.9 bn in H1’2026 from Kshs 192.9 bn in H1’2025, driven by a 10.1% increase in net loans and advances to Kshs 111.1 bn in H1’2026 from Kshs 100.9 bn in H1’2025, coupled with a 55.3% growth in government securities holdings to Kshs 94.1 bn in H1’2026 from Kshs 60.6 bn in H1’2025.

4. Increased lending- Customer net loans and advances increased by 10.1% to Kshs 111.1 bn in H1’2026 from Kshs 100.9 bn in H1’2025, reflecting the bank’s continued appetite to expand customer lending.

For a more detailed analysis, please see our Family Bank H1’2026 Earnings Note.

2. DTB-K Bank H1’2026 Financial Performance

During the week, DTB-K Bank released their H1’2026 financial results, recording a 35.8% increase in profit after tax to Kshs 7.3 bn in H1’2026, from Kshs 5.4 bn in H1’2025;

Key Take-Outs:

1. Increased earnings - Core earnings per share (EPS) increased by 35.8% to Kshs 26.1 in H1’2026 from Kshs 19.2 in H1’2025, driven by the 20.9% growth in total operating income to Kshs 26.5 bn from Kshs 21.9 bn in H1’2025, but was however weighed down by the 12.6% increase in total operating expenses to Kshs 16.6 bn from Kshs 14.8 bn.

2. Improved asset quality – The bank’s asset quality improved, with the gross NPL ratio declining by 0.7% points to 12.2% in H1’2026 from 12.9% in H1’2025, as gross loans increased by 15.1% to Kshs 353.0 bn in H1’2026 from Kshs 306.7 bn in H1’2025, outpacing the 8.7% increase in gross non-performing loans to Kshs 43.1 bn in H1’2026 from Kshs 39.6 bn in H1’2025.

3. Expanded Balanced sheet - The balance sheet recorded an expansion, with total assets increasing by 10.4% to Kshs 675.1 bn in H1’2026 from Kshs 611.5 bn in H1’2025, driven by a 13.7% increase in net loans and advances to Kshs 328.0 bn in H1’2026 from Kshs 288.5 bn in H1’2025, coupled with a 14.1% growth in government securities holdings to Kshs 169.2 bn in H1’2026 from Kshs 148.2 bn in H1’2025.

4. Increased lending- Customer net loans and advances increased by 13.7% to Kshs 328.0 bn in H1’2026 from Kshs 288.5 bn in H1’2025, reflecting the bank’s continued appetite to expand customer lending.

For a more detailed analysis, please see our DTB-K Bank H1’2026 Earnings Note

3. Equity Group H1’2026 Financial Performance

During the week, Equity Group released their H1’2026 financial results, recording a 31.5% increase in profit after tax to Kshs 45.5 bn in H1’2026, from Kshs 34.6 bn in H1’2025;

For a more detailed analysis, please see our Equity Group H1’2026 Earnings Note

4. Absa Bank Kenya H1’2026 Financial Performance

During the week, Absa Bank Kenya released their H1’2026 financial results, recording a 9.8% decrease in profit after tax to Kshs 10.5 bn in H1’2026, from Kshs 11.7 bn in H1’2025;

Key Take-Outs:

1. Decreased earnings - Core earnings per share declined by 9.8% to Kshs 1.9, from Kshs 2.2 in H1’2026, driven by the 6.8% decrease in total operating income to Kshs 29.3 bn, from Kshs 31.5 bn in H1’2025, coupled with 3.5% increase in total operating expense to Kshs 15.2 bn from Kshs 14.7 bn in H1’2025,

2. Improved asset quality – The bank’s Asset Quality improved, with Gross NPL ratio decreasing to 10.2% in H1’2026, from 13.2% in H1’2025, attributable to a 17.8% decrease in Gross non-performing loans to Kshs 36.4 bn, from Kshs 44.2 bn in H1’2025, compared to the 6.2% increase in gross loans to Kshs 355.0 bn, from Kshs 334.4 bn recorded in H1’2025.

3. Expanded Balanced sheet - The balance sheet recorded an expansion as total assets increased by 5.0% to Kshs 558.1 bn, from Kshs 531.6 bn in H1’2026, mainly driven by 8.2% increase Net loans and advances to Kshs 329.9 bn, from 304.9 bn in H1’2025.

4. Decreased Government Holdings – Government Securities decreased by 3.2% to Kshs 157.2 bn, from Kshs 162.4 bn in H1’2025, owing to a 9.2% decrease in government securities interest income to Kshs 6.0 bn from Kshs 6.6 bn recorded in H1’2025.

For a more detailed analysis, please see our Absa Bank Kenya H1’2026 Earnings Note

5. Standard Chartered Bank H1’2026 Financial Performance

During the week, Standard Chartered Bank released their H1’2026 financial results, recording a 16.8% decrease in profit after tax to Kshs 6.7 bn in H1’2026, from Kshs 8.1 bn in H1’2025;

Key Take-Outs:

1. Decreased earnings growth – Core earnings per share decreased by 16.8% to Kshs 17.8 in H1’2026, from Kshs 21.4 in H1’2025, driven by the 8.8% decrease in Total Operating income to Kshs 20.1 bn in H1’2026, from Kshs22.1 bn in H1’2025 which outpaced the 5.6% decrease in total operating expense to Kshs 10.6 bn in H1’2026 from Kshs 11.2 bn in H1’2025,

2. Improved asset quality – The bank’s Asset improved, with Gross NPL ratio decreasing marginally to 5.1% in H1’2026, from 6.0% in H1’2025, attributable to the 6.5% decrease in gross non-performing loans to Kshs 9.0 bn, from Kshs 9.6 bn in H1’2025, and a 10.4% increase in gross loans to Kshs 176.7 bn, from Kshs 160.0 bn recorded in H1’2025, and,

3. Declaration of dividends- The Board of Directors recommended an interim dividend of Kshs 8.5 per share translating to an annualized dividend yield of 9.4% and a dividend payout ratio of 47.7% compared to an annualized dividend yield of 13.4% and dividend payout ratio of 37.4% recorded in H1’2025.

For a more detailed analysis, please see our Standard Chartered Bank H1’2026 Earnings Note

Summary Performance

The table below shows the performance of listed banks that have released their H1’2026 results using several metrics;

Key take-outs from the table include:

1. The listed banks that have released results recorded a 14.3% weighted average growth in core Earnings per Share (EPS) in H1’2026, compared to the weighted average growth of 8.4% in H1’2025.

2. Interest income recorded a weighted average increase of 5.5% in H1’2026, compared to the 2.0% decline recorded in H1’2025. Interest expenses recorded a market-weighted average decline of 5.4% in H1’2026, compared to the 20.7% decline in H1’2025.

3. The Banks’ net interest income recorded a weighted average growth of 13.2% in H1’2026, from the 10.4% growth recorded over a similar period in 2025, while non-funded income increased by 4.8% in H1’2026 compared to the 5.8% decline recorded in H1’2025, and,

4. The Banks recorded a weighted average deposit growth of 7.9% in H1’2026, compared to the market-weighted average deposit growth of 1.7% in H1’2025.

Asset Quality

The table below shows the asset quality of listed banks that have released their H1’2026 results using NPL ratio and NPL coverage:

Key take-outs from the table include;

1. Asset quality for the listed banks that have released results improved during H1’2026, with the market-weighted average NPL ratio decreasing by 2.5% points to 11.3%, from 13.8% in H1’2025. The improvement was supported by reduced NPL ratios from DTB-K and Standard Chartered Bank. The performance was however weighed down by an increase in NPL ratio from Family Bank.

2. Market-weighted average NPL coverage increased by 5.6% points to 73.4% in H1’2026 from 67.8% recorded in H1’2025. The performance was supported by increases in coverage by individual banks such as KCB Group by 14.4% points, DTB-K by 12.2% points, Equity Bank by 9.2% points, Stanbic 3.9% points and Co-operative by 3.1% points. The performance was however weighed down by decrease in coverage by Family Bank by 11.3% points.

6. Liberty Kenya Holdings H1’2026 Financial Performance

During the week, Liberty Kenya Holdings released their H1’2026 results, highlighting that the Profit After Tax decreased by 46.0% to Kshs 0.2 bn, from the Kshs 0.4 bn recorded in H1’2025. The performance was mainly driven by 7.1% decrease in insurance and investments results to Kshs 1.06 bn from Kshs 1.14 bn in H1’2025, coupled with a 58.1% increase in other operating results to Kshs 0.6 bn from Kshs 0.4 bn in H1’2025.

Liberty Kenya Holdings Plc’s H1’2026 Results

Key take outs from the results include:

1. Core Earnings Per share decreased by 46.0% to Kshs 0.4, from Kshs 0.8 in H1’2025, driven by the 46.0% decrease in Profit after tax to Kshs 0.2 bn from Kshs 0.4 bn in H1’2025, which was in turn due to the 7.1% decrease in insurance and investments results to Kshs 1.06 bn from Kshs 1.14 bn in H1’2025,

2. Net insurance revenue before reinsurance contracts held increased by 25.6% to Kshs 1.1 bn in H1’2026 from of Kshs 0.9 bn in H1’2025, while net expense from reinsurance contracts held decreased by 0.8% to remain relatively unchanged from the Kshs 0.6 bn recorded in H1’2025, this translated to an insurance service result increase of 99.1% to Kshs 0.4 bn from Kshs 0.2 bn in H1’2025,

3. Net Financial Result decreased by 7.1% to Kshs 1.06 bn from Kshs 1.14 bn in H1’2025. This was majorly attributable 22.6% decrease investment income to Kshs 1.7 bn from Kshs 2.2 bn in H1’2025. However, this was supported by a 14.9% decrease in net insurance finance expense to Kshs 1.1 bn from Kshs 1.3 bn in H1’2025.

4. The balance sheet recorded an expansion as total assets increased by 7.8% to Kshs 48.9 bn in H1’2026, from Kshs 45.3 bn in H1’2025 mainly driven by 17.5% increase in financial investments to Kshs 34.9 bn from Kshs 29.7 bn in H1’2025, which was however weighed down by 13.7% decrease in reinsurance contract assets to Kshs 1.3 bn from Kshs 1.5 bn recorded in H1’2025.

5. Total liabilities increased by 9.5% to Kshs 38.8 bn, from Kshs 35.5 bn in H1’2025 attributable to the increase in insurance contract liabilities by 9.0% to Kshs 22.5 bn from Kshs 20.7 bn in H1’2025.

6. The Board of Directors did not recommend an interim dividend, which was consistent with H1’2025.

Going forward, the factors that would drive the company’s growth would be:

• Growth in Financial Investments – The company’s financial investments increased by 17.5% to Kshs 34.9 bn in H1’2026, driving total assets up by 7.8% to Kshs 48.9 bn. The continued expansion of the investment portfolio provides Liberty Kenya Holdings with a larger asset base from which to generate future investment income, while offering capacity to capitalize on favourable market conditions and support long-term balance sheet growth. This is particularly important given the company's investment-led business model, although the ability to translate the larger portfolio into improved investment returns will remain key to future profitability.

7. Absa Group Completes Tender Offer for Additional Stake in Absa Bank Kenya PLC

During the week, Absa Group Limited announced the results of its tender offer to buy up to 895,989,600 additional shares in Absa Bank Kenya PLC, which closed on 11th August 2026. Out of the shares offered for sale by shareholders, Absa Group accepted 189,380,644 shares, at a price of Kshs 34.50 per share. This purchase raises Absa Group's total shareholding in Absa Bank Kenya from approximately 68.5% to approximately 72.0% of the bank's issued shares. The shares bought will be transferred to Absa Group through block trades on the Nairobi Securities Exchange, after which the selling shareholders will be paid according to the payment method each of them chose. Below shows the shareholding structure before and after the Tender Offer:

This move reflects Absa’s Group’s continued confidence in the Kenyan banking sector and strengthens its control over it’s local subsidiary, while the transaction itself does not change how Absa Bank Kenya is run day to day, since it is simply a shift of ownership between shareholders.

We maintain a “cautiously optimistic” short-term outlook supported primarily earnings-led attractive valuations but with some of the risks being expected due to the heightened political and geopolitical risks such as Iran war that may weigh on investor sentiment, and, “neutral” in the long term as persistent foreign investor outflows continue to constrain market liquidity and limit broad-based market re-rating. With the market currently trading at par to its future growth (PEG Ratio at 1.0x), the performance will be driven by company-specific fundamentals rather than general market direction, we believe that investors should reposition towards value stocks exhibiting strong earnings growth, attractive dividend yields, solid balance sheets, sustainable competitive advantages and trading at compelling discounts to their intrinsic value. While foreign investor sell-offs are expected to continue exerting pressure in the near term, we believe this will create selective entry opportunities for long-term investors

1. Industry Report

1. June Leading Economic Indicators (LEI)

During the week, the Kenya National Bureau of Statistics (KNBS) released the Leading Economic Indicators (LEI) June 2026 Report, which highlighted the performance of major economic indicators. The key highlights related to the Real Estate sector include:

1. Cement consumption: In June 2026, cement consumption reached 0.9 metric tonnes, representing an 11.2% y/y increase from 0.8 metric tonnes in June 2025. In Q2’2026, cement consumption increased by 11.1% reaching 2.7 metric tonnes, from 2.4 metric tonnes recorded in Q2’2025. Quarter-on quarter basis, the consumption decreased by 2.6% from 2.8 recorded in Q1’2026. Month-on-month, consumption decreased by 3.9%, to 893,447 from 929,328 in May attributable to increased construction input cost during the period, such as transport and fuel. The y/y performance was anchored by (i) continued private sector construction activity in urban hubs such as Nairobi, Mombasa, and Kisumu, (ii) government-led infrastructure investments under the Bottom-Up Economic Transformation Agenda (BETA), including roads, affordable housing, water, and sanitation projects, and (iii) public works initiatives in rural and semi-urban areas, which both support livelihoods and expand critical infrastructure.

The chart below shows cement consumption in metric tonnes in Kenya between Q1’2023 and Q2’2026.

Source: Kenya Bureau of Statistics (KNBS)

1. Residential Sector

1. Housing Levy Defaulters Face Tougher KRA Enforcement

During the week, the Kenya Revenue Authority (KRA) moved to strengthen enforcement of the Affordable Housing Levy following amendments introduced under the Finance Act 2026. The changes give KRA clearer powers to recover unpaid or unremitted housing levy, including through measures such as bank account recovery, asset seizures and PIN deactivation. The move follows concerns over widespread noncompliance, with an audit of the Affordable Housing Fund indicating that thousands of taxpayers were paying other taxes but not the housing levy. Housing levy collections stood at Kshs 79.9 bn in the year to June 2026.

The development comes after the housing levy framework underwent changes following its introduction, with KRA collecting the current 1.5% levy on gross pay or income from July 2024. However, despite KRA being responsible for collection, the authority previously lacked explicit legal powers to pursue unpaid or unremitted amounts, creating a gap between the requirement to pay and the ability to enforce compliance. This appears to have contributed to the compliance challenges, particularly among informal sector businesses and employers, with an audit finding that 6,390 companies were remitting PAYE but not the housing levy. The Finance Act 2026 has now addressed this gap by giving KRA stronger recovery powers, allowing it to assess and pursue outstanding levy in a similar manner to other tax liabilities.

Going forward, we expect the enhanced enforcement measures to improve housing levy compliance and strengthen revenue mobilization for the Affordable Housing Fund. This could provide greater visibility and consistency around funding for affordable housing projects, although the pace at which this translates into additional housing supply will also depend on the government's ability to effectively deploy the funds towards ongoing and planned developments.

2. Mixed Use Sector

1. NSSF Revives 1,000 Acre Mavoko Development Plan

During the week, the National Social Security Fund (NSSF) announced plans to revive its approximately 1,000-acre landholding in Katani, Mavoko, Machakos County through the development of a mixed-use city. The fund is seeking a development partner to undertake feasibility studies, prepare a master plan and implement an initial phase of the project. Unlike its earlier proposals that largely centered on housing, the current concept brings together residential, commercial, industrial, institutional, warehousing and hospitality uses, creating a broader development model for the property. The land has remained largely undeveloped despite previous proposals dating back to 2012, including plans for 30,000 housing units and a later proposal for 60,000 low cost houses.

The renewed interest comes as both the property and the surrounding market have evolved. Land values in the neighboring Syokimau area have increased from about Kshs 17.2 mn per acre in 2015 to Kshs 39.4 mn currently, highlighting the significant appreciation of land within the wider Mavoko and Nairobi metropolitan growth corridor. At the same time, NSSF's assets under management have expanded to Kshs 623.8 bn as at December 2025, providing a stronger financial base than during its earlier attempts to develop the site. The move towards a mixed-use model also reflects the need for developments of this scale to incorporate multiple property segments and supporting amenities rather than rely on housing alone.

Going forward, if implemented successfully, the project is expected to accelerate the transformation of Mavoko into a more established residential and commercial destination within the Nairobi metropolitan area. A development combining housing, businesses, industrial facilities and supporting services could stimulate demand for surrounding land and property while attracting additional private sector development into Machakos County. The scale of the project could also improve the area's infrastructure and create a more integrated urban environment, although the extent of its impact will ultimately depend on the project's execution, infrastructure provision and ability to attract sustained demand.

3. Real Estate Investments Trusts

1. REITs Weekly Performance

On the Unquoted Securities Platform Acorn D-REIT and I-REIT traded at Kshs 29.7 and Kshs 24.4 per unit, respectively, as per the last updated data on 14^th August 2026. The performance represented a 48.5% and 22.0% gain for the D-REIT and I-REIT, respectively, from the Kshs 20.0 inception price. The volumes traded for the D-REIT and I-REIT came in at 13.6 mn and 44.5 mn shares, respectively. Additionally, ILAM Fahari I-REIT traded at Kshs 13.8 per share as of 14^th August 2026, representing a 31.0% loss from the Kshs 20.0 inception price. The volume traded to date came in at 1.2 mn shares for the I-REIT, REITs offer various benefits, such as tax exemptions, diversified portfolios, and stable long-term profits. However, the ongoing decline in the performance of Kenyan REITs and the restructuring of their business portfolios are hindering significant previous investments. Additional general challenges include:

1. Insufficient understanding of the investment instrument among investors leading to a slower uptake of REIT products,

2. Lengthy approval processes for REIT creation,

3. High minimum capital requirements of Kshs 100.0 mn for REIT trustees compared to Kshs 10.0 mn for pension funds Trustees, essentially limiting the licensed REIT Trustee to banks only

4. The rigidity of choice between either a D-REIT or and I-REIT forces managers to form two REITs, rather than having one Hybrid REIT that can allocate between development and income earning properties

5. Limiting the type of legal entity that can form a REIT to only a trust company, as opposed to allowing other entities such as partnerships, and companies,

6. We need to give time before REITS are required to list – they would be allowed to stay private for a few years before the requirement to list given that not all companies maybe comfortable with listing on day one, and,

7. Minimum subscription amounts or offer parcels set at Kshs 0.1 mn for D-REITs and Kshs 5.0 mn for restricted I-REITs. The significant capital requirements still make REITs relatively inaccessible to smaller retail investors compared to other investment vehicles like unit trusts or government bonds, all of which continue to limit the performance of Kenyan REITs

We expect the performance of Kenya's Real Estate sector to remain resilient, supported by several factors, including: i) increase in cement consumption to 0.9 metric tonnes, representing an 11.2% y/y increase from 0.8 metric tonnes in June 2025 , ii) KRA’s plan to strengthen enforcement of the Affordable Housing Levy, and iii) NSSF’s plans to revive its 1,000-acre landholding in Katani, Machakos County through the development of a mixed-use city. However, challenges such as weak investor appetite in listed REITs and high capital requirements will continue to constrain the sector's optimal performance

1. Central Bank of Kenya Streamlines Retail Securities Settlement via DhowCSD M-Pesa Integration

During the week, the Central Bank of Kenya (CBK) highlighted the mobile payment integration within its DhowCSD platform, enabling retail investors to settle accepted Treasury bill and Treasury bond bids of up to Kshs 250,000.0 directly using M-Pesa. Under the facility, investors initiate post-auction payments from the Transactions tab of the DhowCSD app or web portal rather than navigating external payment gateways. The initiative represents a key milestone in Kenya’s digital sovereign debt infrastructure, removing operational friction for small-scale domestic investors while complementing broader market upgrades, such as the international debt market link established with Clear stream in June 2026. By automating micro-settlements over mobile rail channels, the CBK deepens domestic financial inclusion, reduces retail settlement drop-offs, and lowers administrative costs associated with government paper issuance.

2. American Express Declares Dividend on Series E Preferred Shares

During the week, American Express Company announced that its Board of Directors declared a regular dividend on the company’s 6.5% Fixed Rate Reset Noncumulative Preferred Shares, Series E. The declared dividend stands at USD 5,912.5 per share or USD 5.9 per related Depositary Share, scheduled for payment on September 15, 2026, to shareholders of record as of September 1, 2026. The announcement reflects American Express’s ongoing capital allocation framework and commitment to maintaining consistent capital returns to preferred security holders while sustaining strong capital ratios across its commercial and consumer payment operations.

3. Mastercard Partners with SNB Group to Launch First World Legend Card in MENA Region

During the week, Mastercard Incorporated partnered with SNB Group to launch the SNB World Legend Mastercard in Riyadh, Saudi Arabia, marking the first deployment of Mastercard’s highest-tier product offering in the Middle East and North Africa (MENA) region. Targeted specifically at SNB’s Private Banking clientele, the card introduces a curated luxury ecosystem featuring 24/7 concierge services, bespoke travel perks, global economic forum access via Bloomberg partnerships, and airport lounge access. The launch aligns with Mastercard’s strategic push to deepen its penetration in high-net-worth market segments across high-growth emerging economies, capture premium cross-border transaction volumes, and support economic digitization goals aligned with Saudi Vision 2030.

4. PayPal and Venmo Expand Higher Education Footprint via Major Tuition Integrations

During the week, PayPal Holdings, Inc. announced major integrations with leading higher education payment management platforms Illumia, Nelnet Campus Commerce, and TouchNet (a Global Payments company). The partnership allows students and families across participating institutions including Michigan State University, Texas Tech University, and Butler University to pay tuition and campus fees directly using PayPal or Venmo balances, bank transfers, or linked cards. The strategic expansion builds upon PayPal's broader collegiate engagement strategy following its major revenue-sharing agreements with the Big Ten and Big 12 conferences. By embedding its wallet infrastructure directly into core institutional billing software, PayPal expands its everyday addressable payment volume, lowers payment friction for high-value family expenditures, and enhances platform lock-in among younger demographics.

1. Digital Payments Stock Performance

The table below presents a snapshot of NYSE-listed digital payments stocks, covering Visa, Mastercard, American Express (AXP), Wise Plc, Block and PayPal: