The Nairobi Securities Exchange (NSE) has launched a Banking Sector Index, effective 1 October 2025, as a tailored benchmark that will track the performance of listed banking institutions in a transparent, market-capitalisation weighted and float-adjusted format.
The index aims to provide investors with a clear measure of how the banking sector is performing, and is expected to deepen investor confidence, support product innovation such as exchange-traded funds (ETFs) and strengthen sector-level analysis going forward.
The new index will cover freely tradable shares of 11 listed banks in Kenya: Absa Bank Kenya Plc; BK Group Plc; Diamond Trust Bank Kenya Ltd; Equity Group Holdings Plc; HF Group Plc; I&M Group Plc; KCB Group Plc; NCBA Group Plc; Stanbic Holdings Plc; Standard Chartered Bank Kenya Ltd; and The Co-operative Bank of Kenya Ltd.
Each constituent is weighted by market capitalisation but adjusted for free float, so only shares available for trading influence their weight. The goal is to more accurately reflect how the banking sector’s publicly traded equities behave.
Between January and September 2025, the banking sector in Kenya delivered robust performance; anchored by strong earnings growth, expanding balance sheets, and ongoing innovations in financial services. By aggregating these trends into one coherent index, the NSE hopes to give investors a meaningful lens through which to track sector momentum.
In May, during the Nairobi Securities Exchange’s (NSE) latest quarterly review of listed companies, HF Group Plc and Diamond Trust Bank Kenya Ltd (DTB) were added to the prestigious NSE 20 Share Index. The inclusion of the two lenders reflects their improved market performance, liquidity, and overall contribution to investor activity.
Commenting on the launch, NSE Chief Executive, Mr. Frank Mwiti, stated, “This milestone underscores NSE’s commitment to innovation and the continuous development of products that meet evolving investor needs while strengthening Kenya’s capital markets”.
“The launch of the Banking Sector Index is fully aligned with our new strategy of driving product diversification and deepening market activity. Beyond providing investors with a reliable performance tracker, the Index will highlight the banking sector as a key driver of economic growth and create a strong foundation for future product innovation. This is a critical step in positioning the NSE as a modern, globally competitive marketplace.” he added.
For institutional and professional investors, the new index offers a refined tool to benchmark portfolio allocations within the banking sector. Rather than selecting individual bank stocks in isolation, fund managers can now assess relative performance against a sector peer benchmark.
For retail and smaller investors, a major benefit lies in the potential development of index-linked products; for example, ETFs or unit trusts that mirror the index. That would allow broader participation in the banking sector without the risks of stock-picking.
The index is also intended to support sector-based research, guide capital allocation decisions, and attract deeper market activity by giving more visibility to listed banks.
Do you have any story or press releases you want to share? Send tips to editor@envestreetfinancial.com
Follow us on Twitter, Facebook, or LinkedIn to ensure you don’t miss out on any