Regulatory reporting shows that microfinance banks are struggling to rebound after the COVID 19 pandemic, with the number of accounts declining by four percent and total assets declining by two percent to Ksh.74.9 billion from Ksh.76.4 billion for 2019. Further, the regulator reports that net advances declined by 5 percent. These inadequacies motivate this study which examined the effect of firm-level factors and regulatory capital on MFI’s profits. The agency and efficiency structure theory were the study’s basis. A positivist research philosophy was applied together with a quantitative descriptive research design. The study targeted three (3) large microfinance banks, five (5) medium microfinance and six (6) small MFB licenced by the Central Bank of Kenya and collected panel data published by the MFBs between 2010 and 2020. Descriptive and inferential techniques were used in analysis. The correlation tests established that liquidity, market share and regulatory requirements do not have a significant effect on Kenyan MFB’s ROA. Further, it was established that firm age and size have a significant positive effect on MFB’s ROA. The study findings support the conclusion that while firm-level factors and regulatory requirements have a positive and significant effect on Kenyan MFBs profits, liquidity levels do not have a significant influence and market share had a negative but insignificant effect. Further, firm age negatively impacted the MFB’s profits. The research recommends that the microfinance banks should employ more robust liquidity management policies that will improve their capacity to meet their financial obligations. Further, the firms should routinely review their compliance to regulatory requirements to ensure they maintain a healthy capital adequacy position. The study recommends that firms review their current market outreach programmes to leverage on their market position and experience to drive financial outcomes. Lastly, the firms should maintain their asset management strategies which will be key to improving the firm value and their overall financial performance.

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