There is a version of Consolidated Bank’s FY 2025 story that reads cleanly. A government-owned lender, long written off as one of Kenya’s weakest banks, swings from a KES 135 million loss to a KES 217.5 million profit. Total income hits an all-time high of KES 1.9 billion. Deposits grow. Assets grow. The turnaround is working.
That version is true. And it deserves to be told.
But the audited financial statements sitting behind that press release contain numbers that tell a more complicated story. The two things are not in contradiction. They are both part of the same institution, in the same year, and any honest account of Consolidated Bank’s 2025 must hold them together.
What the Bank Got Right
Let’s start with the good news.
For the financial year ended 31st December 2025, Consolidated Bank posted a profit before tax of KES 217.5 million. In 2024, it posted a loss of KES 135 million. That is a KES 352.5 million swing in the right direction, in a single year.
The press release describes this as a 261% improvement, and the maths is technically correct. But for most readers, the cleaner way to understand it is this: the bank stopped losing money and started making it.
The income side of the business drove that shift. Net interest income grew 38% to KES 1.3 billion, up from KES 940 million the year before. Non-funded income, fees, commissions, and other operating revenue, grew 11% to KES 631 million. Together, total operating income reached KES 1.9 billion, the highest the bank has ever recorded.
Costs were held almost flat. Operating expenses grew just 1%, from KES 1.6 billion to KES 1.7 billion. When income grows 28% and costs grow 1%, the profit gap opens up fast. That is the efficiency story the bank’s acting CEO Dr. Dominic Murage is rightly proud of.
Deposits grew 10% to KES 12.3 billion. Total assets grew 11% to KES 19.5 billion. The bank also maintained a liquidity ratio of 30%, comfortably above the 20% CBK statutory minimum.
The transformation agenda the bank references has produced measurable results.
Where the Income Actually Came From
Here is where the audited statements add important nuance.
The income growth looks strong on the surface, but drilling into it reveals something telling. Interest income from loans and advances actually fell, from KES 1.28 billion in 2024 to KES 1.17 billion in 2025. That is a 9% decline in the bank’s core lending revenue.
What drove income growth instead was a sharp increase in earnings from government securities. Income from government securities jumped from KES 535 million to KES 838 million, a 57% increase. The bank grew its holdings of government securities by 29%, from KES 6.4 billion to KES 8.2 billion.
Meanwhile, loans and advances to customers grew less than 1%, from KES 8.51 billion to KES 8.56 billion, essentially flat.
In plain terms, Consolidated Bank made more money in 2025 largely by lending more to the government and less to businesses and individuals. That is a rational and low-risk strategy, especially in a tough operating environment. Government securities are safe, liquid, and currently offer attractive yields in Kenya’s interest rate environment. But it is not the same as building a strong commercial lending engine, and it is worth understanding the distinction.
The bank’s acting CEO acknowledged the operating environment directly, noting that provisions for loan impairments grew 23% to KES 288 million, driven by the difficult conditions businesses faced in 2025. Gross non-performing loans also rose, from KES 3.6 billion to KES 4.1 billion, a 12% increase. The bank’s net NPL exposure is fully covered by provisions and security, but the underlying trajectory of bad loans is moving in the wrong direction.
The Number the Press Release Does Not Mention
Here is the part that requires honest discussion.
The audited financial statements, published alongside the press release, include a section on capital strength. The numbers are stark.
Consolidated Bank’s core capital stood at negative KES 546 million at the end of 2025. The CBK’s minimum statutory requirement for core capital is KES 3 billion. That means the bank is short by KES 3.546 billion.
To put that in context: core capital, also called Tier 1 capital, is the primary financial cushion a bank holds to absorb losses. It is what stands between a bank’s depositors and insolvency if things go badly. When it is negative, it means the bank’s accumulated losses have wiped out not just its profits, but its entire paid-in capital base.
The bank’s core capital as a ratio of risk-weighted assets stands at -4.4%, against a required 10.5%. Its total capital ratio is also -4.4%, against a required 14.5%. Every major capital adequacy ratio is in negative territory.
The audited statements acknowledge this directly. The cover note states: “The National Treasury has committed to a capital injection towards bridging the capital gap, even as the Board and management are implementing other capital build-up plans.”
This is not a small or technical shortfall. It is a structural challenge that the bank has been carrying for years. The accumulated losses on the Group balance sheet stand at KES 4.23 billion. The profit earned in 2025, KES 198 million after tax, is meaningful progress. But at that pace, clearing the accumulated losses alone, without additional capital, would take over two decades.
The government’s commitment to inject capital is therefore not optional. It is essential to the bank’s continued operation and regulatory standing.
The Government Bank Bet
Consolidated Bank is one of a handful of fully government-owned commercial banks still operating in Kenya. That ownership is both its challenge and its strategic card.
The challenge is well documented. Government-owned banks in Kenya have historically struggled with political lending, weak governance, and chronic undercapitalisation. NBK, before its acquisition by Access Bank, was the most prominent recent example. Consolidated Bank’s own accumulated losses reflect decades of that same history.
But the acting CEO is making a deliberate bet on that government ownership as a competitive differentiator. In his statement, Dr. Murage specifically called out the bank’s ambition to become “the preferred banking partner for the public sector,” deepening relationships with government agencies, parastatals, universities, and ministries.
That is a clearly defined lane. And with Kenya’s public sector representing enormous deposit and financing flows, it is a rational one. The question is whether Consolidated Bank can execute on it while simultaneously fixing its capital position, managing rising NPLs, and competing against larger, better-capitalised rivals for the same institutional clients.
SMEs are the other stated priority. The bank describes them as “central to our business model,” and SME lending in Kenya remains significantly underserved. But growing an SME loan book requires capital, risk appetite, and credit infrastructure. All three are areas where Consolidated Bank is still building.
What 2026 Needs to Deliver
The 2025 results are an important step. They demonstrate that the management team can control costs, grow income, and return the bank to profitability. Those capabilities matter.
But the path from here to a sustainable, fully compliant bank runs directly through the capital injection question. Until National Treasury delivers on its commitment, Consolidated Bank will remain technically below every CBK capital adequacy threshold, regardless of how well it manages its income statement.
The bank needs to show, in 2026, that the NPL trajectory is turning. Gross NPLs rising 12% in a single year, while the loan book was essentially flat, is a ratio that demands attention. It means the quality of the existing book is deteriorating even as new lending barely grows.
And it needs to demonstrate that the income model can shift back towards lending. Government securities are a sensible defensive play. But a commercial bank that earns most of its interest income from the government, rather than from financing businesses and households, is not yet fulfilling its core purpose.
The turnaround at Consolidated Bank is real. The foundations being built in 2025 are genuine. The numbers are better than they were, and that matters.
But a profitable bank with negative capital is still a bank with unfinished business. The good news is that for the first time in a long time, Consolidated Bank looks like it is doing the work.
