Banks have positively reacted to the Central Bank of Kenya’s
call to further ease the cost of credit in a bid to spur private sector lending
and investment.
This follows a close-door meeting held mid-last month between the regulator and CEOs of top banks in the country.
The latest report by the apex bank dubbed ‘Commercial Banks’ Weighted Average Lending Rates’ for September published on Friday reveals the wide differences in lending rates in the market, with some banks lending at below 10 per cent while others charge well above 20 per cent per annum for loans.
Cooperative Bank and DTB have the lowest lending rates among Tier One banks with overall lending rates Care pay International and M-TIBA Group CEO Pieter Prickaerts with Insurance Institute of Kenya Honorary Secretary George Ogutu at the 39th Annual Insurance Institute of Kenya conference.
The two shared insights on how Artificial Intelligence and Machine learning are changing the insurance landscape Julius Chilango, head of sales at Edele Dejak displays some of the pieces at their new firm at Village Market in Nairobi of 14.88 per cent and 12.44 per cent per annum, respectively.
The two lenders are charging below the industry average of 15.6 per cent after the apex bank further lowered CBR to 12 per cent on October 8 from 12.75 per cent.
This was the second consecutive rate reduction.
Although other top banks like KCB and Equity have lowered their average lending rates to 16.02 and 16.20 respectively, their lending rates are still way above the industry average.
Others are National Bank 16.51, Family Bank 16.56 and Standard Chartered Bank 18.24 per cent.
Absa Bank is still the most expensive Tier 1 bank charging an average of 20.02 per cent followed by NCBA at 19.22 per cent.
According to the report, Premier Bank and Access Bank offer the most affordable rates at 9 percent and 11.42 percent per annum respectively.
The most expensive lender according to the report is the Middle East Bank with an overall lending rate of 21.52 percent.
Analysts are expecting the CBK’s Monetary Policy Committee (MPC) to retain the anchor rate at 12 per cent in the end-of-year review after the country’s inflation rate eased below three per cent as projected by President William Ruto’s administration.
Official monthly inflation data released by the Kenya National Bureau of Statistics (KNBS) shows that the general price level was 2.7 per cent higher in October 2024 than it was in the corresponding month last year.
The price increase was mainly driven by food and non-alcoholic beverages, which rose by 4.3 per cent, housing, water, and electricity by 0.4 per cent.
“I project CBK to retail the base lending rate going forward as the inflation eases. The local currency has also stabilised against major international currencies, with the latest quarterly statistics by the Capital Markets Authority (CMA) indicating a 23 per cent gain year on year,’’ Rufas Kamau of EGM Securities,in his weekly market analysis said.
He said other global heavyweights like the US and UK who also have trimmed anchor rates in past reviews will also likely adopt a watch and see given easing cost of living.
At the September 2024 Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) lowered interest rates by 50 basis points, easing monetary policy for the first time in four years due to progress on the Fed’s dual mandate.
This lowered the interest rate target to a range of 4.75 per cent to five per cent.
Earlier on, the Bank of England had lowered interest rates to five per cent in the first reduction since March 2020.
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