Consolidated Bank of Kenya is set for a boost after a National Treasury circular directed State agencies, including parastatals, to channel more business to the lender in a bid to strengthen its role in financing development projects.
Treasury Cabinet Secretary John Mbadi, in a circular dated April 20, 2026, urged ministries, counties, departments and agencies, as well as State corporations and government-owned enterprises, to “actively collaborate with and support” the lender by utilising its banking, financial and insurance services.
“Such support will go a long way in strengthening this important national institution and promoting a more resilient and inclusive financial ecosystem in the country,” said Mr Mbadi in the circular.
The circular was copied to key government officials, including the Head of Public Service and the bank’s acting chief executive Dominic Murage, signalling high-level backing for the initiative. Dr Murage is a financial scholar who was tapped from the University of Nairobi to lead the bank.
The directive effectively places the State-owned lender at the centre of public sector transactions, potentially boosting its deposit base, transaction volumes and lending capacity at a time when the government is seeking to strengthen local financing channels for development.
Consolidated Bank is majority-owned by the government, with a 93.4 percent stake held by the Treasury and the remainder by other State institutions. The State is lining up a Sh1.125 billion capital injection into the lender.
The bank ended December with core capital of negative Sh546.07 million, leaving a funding gap of at least Sh3.54 billion to meet the current minimum of Sh3 billion under new capital rules.
The threshold is set to rise progressively to Sh5 billion by year-end, Sh6 billion in 2027, Sh8 billion in 2028 and Sh10 billion by 2029.
Mr Mbadi’s directive offers a lift to Mr Murage after the lender posted a net profit of Sh198.18 million at the end of 2025, reversing a net loss of Sh155.22 million the previous year.
The latest profit marks the bank’s first in 11 years, with the previous net profit recorded in 2014 at Sh44.42 million.
Mr Murage recently said the lender is prioritising efficiency and deeper collaboration with small businesses and the public sector to drive growth.
“Small and medium enterprises remain central to our business model and portfolio, and we intend to deepen our support for them. We aim to strengthen our collaboration with government agencies, parastatals, universities and ministries to position Consolidated Bank as the preferred banking partner for the public sector,” said Mr Murage.
Growth strategy
Treasury’s push to have State entities route more business through the bank appears set to guarantee the lender a steady pipeline of deposits and transactions, improving liquidity and supporting credit extension, particularly for government-linked projects.
The bank’s deposits crossed the Sh10 billion mark in 2020 and have continued to rise, closing last year at Sh12.29 billion from Sh11.71 billion in 2024.
However, the loan book has remained largely stagnant over the same period, closing last year at Sh8.55 billion from Sh8.51 billion in the previous year and Sh8.54 billion in 2020.
Mr Mbadi said the government is working with the lender’s board and management to position it as a “key partner in national development” and that support from State entities would improve its prospects.
“The board and management of Consolidated Bank, with the support of the government, have undertaken deliberate measures and strategic initiatives to strengthen the bank’s growth, enhance operational efficiency, and position it as a key partner in national development,” the circular reads.
