A recent report indicates that banks in Kenya are imposing average interest rates for loans ranging from 9 to 20.96 percent, prior to considering the credit profiles of borrowers.
The Commercial Banks Weighted Average Lending Rates, published by the Central Bank of Kenya (CBK) report, identifies Premier Bank Kenya as the most affordable lender, offering loans at a rate of nine percent, significantly lower than the base lending rate of 12.75 percent.
According to the report, Middle East Bank is noted for having the highest loan rates in the country, averaging 20.96 percent.
Access Bank, which is based in Nigeria and intends to acquire the National Bank of Kenya from KCB Group Plc, ranks as the second least expensive lender, with an average interest rate of 11.37 percent.
Additionally, Diamond Trust Bank, Consolidated Bank, and Kingdom Bank, a subsidiary of Cooperative Bank Group, are among the five banks with the lowest rates, charging average rates of 12.4, 13.3, and 14.02 percent, respectively.
The report further reveals that Cooperative Bank stands out as the most economical lender among top-tier banks, with an average interest rate of 15.18 percent for various loan products, which can range from overdrafts to terms exceeding five years.
This rate is significantly below the industry average, which has increased to 16.3 percent from 15.8 percent over the past three months.
Furthermore, the report highlights that Cooperative Bank offers the third lowest interest rate on long-term loans for corporate clients, set at 11.3 percent, following Premier Bank and Access Bank, which charge nine and 11.2 percent, respectively.
KCB and Equity Bank, recognized as the leading lenders in the nation based on asset value, are currently imposing average interest rates of 16.4% and 16.2%, respectively, across their various loan offerings.
In contrast, NCBA and Absa rank among the least affordable Tier 1 lenders, with rates of 19.91% and 19.12%, respectively.
Other institutions, such as Standard, Stanbic, and I&M, are charging interest rates of 17.3%, 17.5%, and 18.48%.
Notably, Premier and EcoBank provide the most competitive interest rates for personal short-term loans, at 9% and 11.06%, making them attractive options for many borrowers.
Additionally, Credit Bank and Middle East Bank are the priciest in the personal short-term loan category, with rates of 23.2% and 21.4%.
For overdraft services, Access Bank, DTB, and Equity Bank offer the most favorable rates in the country, at 11.3%, 12.03%, and 12.2%, respectively.
On the other hand, Middle East Bank and HFC are the most expensive in this category, charging 24.3% and 21.94%.
Businesses seeking affordable short-term credit are likely to turn to Premier Bank and Access Bank, which offer the lowest rates of 9% and 11.3%.
In contrast, Commercial International Bank (CIB) and NCBA present the highest rates in this category, at 22.3% and 21.98%, respectively.
The elevated bank rates have adversely affected the country’s economy over the past year, following the Central Bank of Kenya’s (CBK) series of base rate increases aimed at controlling inflation, which peaked at 9.6% in October of the previous year.
The regulator aligned its actions with global trends, raising the rate six consecutive times to reach a 12-year high of 13% in February.
However, earlier this month, the CBK’s Monetary Policy Committee (MPC) reduced the base rate to 12.75%.
