For borrowers seeking affordable loans, the following banks offer the lowest interest rates:
- Access Bank Kenya – 11.46%
- Standard Chartered – 15.28%
- Stanbic Bank – 15.36%
- Equity Group – 16.07%
- Diamond Trust Bank (DTB) – 16.80%
- KCB Bank – 16.84%
- Co-operative Bank – 16.90%
- I&M Bank – 17.86%
- NCBA Bank – 18.04%
- Absa Bank – 18.95%
Banks with the Most Expensive Loans
On the higher end, Middle East Bank Kenya had the steepest lending rates at 22.00%, followed by:
- Credit Bank – 20.41%
- CIB Kenya – 20.20%
- HF Group – 20.17%
- Sidian Bank – 19.95%
Decline in Lending Rates and Explanation
Kenya’s banking sector has seen a significant shift in interest rates following the Central Bank of Kenya’s (CBK) easing policy. The average lending rate by commercial banks eased marginally from 17.22% in November to 16.89% in December 2024. In response to CBK’s policy adjustments, 23 banks reduced their lending rates, while 14 banks increased theirs. Equity Bank retained its rates from November.
Lending to the private sector declined by 1.1% in the 12 months to November, while the gross non-performing loans ratio slightly dropped to 16.5% in October from 16.7% in August. The trend suggests that CBK’s policies are influencing lending costs and accessibility in the banking sector.
Factors Influencing the Interest Rate Trends
CBK has been actively encouraging commercial banks to align their interest rates with the benchmark rate cuts. Governor Kamau Thugge emphasized the need for fairness, urging banks to lower their rates at the same pace they increased them when policy rates were raised.
However, the Kenya Bankers Association noted that lending rate reductions would be implemented progressively, as banks rely on mobilized deposits to issue loans.
Deposit and Savings Rate Adjustments
While lending rates have been declining, the deposit rate also edged lower to 10.41% in December from 10.45% in November. On the other hand, savings rates increased from 3.54% in November to 4.25% in December.
CBK’s Monetary Policy and Future Outlook
CBK initiated its easing campaign in August 2024, starting with a 25 basis point rate cut, followed by a 75 basis point cut. By the end of the year, the benchmark rate had been reduced to 11.25% after a final 75 basis point cut in December. The next Monetary Policy Committee (MPC) meeting is set for 8th February 2025, where further rate adjustments may be announced.