How Co-op Bank Is Expanding Lending as Loan Growth Outpaces Deposits
Co-operative Bank of Kenya increased lending at a faster rate than customer deposits in the first half of 2026, with net loans and advances rising 18.1% to KSh462.2 billion while deposits grew 11.2% to KSh623.2 billion.
The growth means loans expanded by 6.9 percentage points faster than deposits during the six months ended June 2026.
The faster growth in the loan book was supported by increased lending through digital credit platforms, MSME financing, youth programmes and merchant banking solutions.
Loan Growth Outpaces Deposit Growth
Co-op Bank’s net loans and advances increased by 18.1% to KSh462.2 billion during the first half of 2026. Over the same period, customer deposits increased by 11.2% to KSh623.2 billion.
The difference between the two growth rates shows that lending expanded faster than the bank’s deposit base during the period.
The increase in deposits nevertheless added to the funds available to support the Group’s lending activities, while borrowed funds declined 11.4% to KSh58.2 billion from KSh65.7 billion.
Digital Lending Drives Credit Expansion
Digital credit was one of the channels through which Co-op Bank expanded access to loans during the period. E-Credit disbursements reached KSh40.4 billion in the first half of 2026. Since inception, the E-Credit platform has disbursed more than KSh561.2 billion.
Cumulative MCo-op Cash loan customers increased to 15.6 million, showing the scale of the bank’s digital credit customer base.
The digital lending ecosystem forms part of Co-op Bank’s lending channels alongside conventional banking products and targeted financing programmes.
MSMEs Account For 16.5% of Loan Book
MSMEs remained an important segment of Co-op Bank’s lending portfolio, accounting for 16.5% of the bank’s loan book. The bank had onboarded 268,604 MSMEs onto tailored MSME packages by June 2026.
A further 71,298 MSMEs were supported through capacity-building and training initiatives. MSMEs also accounted for 23.1% of customer deposits, giving the segment a role on both sides of the bank’s balance sheet.
Youth Lending Reaches Ksh 27 Billion
Co-op Bank had disbursed more than KSh27 billion to youth customers by the end of the first half of 2026. The financing supported more than 500,000 young people in entrepreneurship and business expansion.
The bank’s youth financial services proposition includes digital account opening, savings, investments, credit, financial literacy and business support.
Co-op Bank also established a dedicated Youth Financial Services Division, with a medium-term target of reaching 10 million young customers. More than 150,000 youth had been enrolled in structured financial literacy programmes.
Merchant Loans Provide Working Capital
Co-op Bank is also expanding access to business credit through its merchant payments ecosystem. Businesses using the CoopTill App can request payments and access instant Till loans for working capital.
The ecosystem includes merchant payment services through POS, Lipa Na M-Pesa and Chapa Pay, linking payment services with access to credit.
Loan Growth Comes With Improved Asset Quality
The increase in lending was accompanied by an improvement in the Group’s reported credit-risk indicators. The non-performing loan ratio declined to 13.9% in H1 2026 from 17.2% in H1 2025.
Cost of risk also fell to 1.8% from 2.4% over the same period.
Co-op Bank said it continued strengthening asset quality through proactive credit management, customer engagement and portfolio monitoring.
Deposits Remain Larger Than Loans
Despite loans growing faster than deposits, Co-op Bank’s deposit base remained larger than its net loan book. Customer deposits stood at KSh623.2 billion compared with net loans and advances of KSh462.2 billion at the end of June 2026.
The bank’s borrowed funds declined to KSh58.2 billion, while government securities increased 7.0% to KSh271.6 billion from KSh253.7 billion. The changes came as the Group continued optimising its funding mix while expanding its loan portfolio.
