First Community Bank (FCB), Ecobank Kenya, and HF Bank offer the lowest interest rates in Kenya, a new report has shown. In contrast, larger players such as Absa and Equity Group are listed among those with higher interest rates.
According to the data from the Central Bank of Kenya (CBK), out of the 39 commercial banks analyzed, 27 of them have increased their overall lending rates in the three-month period leading up to March 2023.
Based on the review conducted, the lowest lending rate among the analyzed commercial banks is recorded at 9%, with First Community Bank (FCB) offering this rate. On the other hand, Credit Bank is listed as having the highest lending rate at 17.6%.
Below are the top 10 cheapest banks in Kenya:
- First Community Bank (FCB) – 9%
- Ecobank – 10.7%
- HFC – 11%
- Access Bank – 11.2%
- Consolidated Bank – 11.6%
- Habib Bank – 11.9%
- DTB – 12.1%
- Citibank – 12.2%
- KCB – 12.3%
- StanChart – 12.3%
When it comes to the other side of the spectrum, Credit Bank, with an average loan rate of 17.6 percent, tops the charts with higher rates followed by Middle East Bank (16 percent) and Sidian at 14.9 percent.
Absa and Equity Bank Kenya, two significant players in the banking sector, are ranked sixth and seventh in terms of lending rates. Absa has an average interest rate of 14.2 percent, while Equity Bank Kenya follows closely with an average interest rate of 14.1 percent.
Below are the top ten most expensive banks:
- Credit Bank – 17.6%
- Middle East – 16%
- Sidian – 14.9%
- CIB – 14.7%
- Victoria Bank – 14.5%
- Absa Bank – 14.2%
- Equity Bank – 14.1%
- M-Oriental – 14%
- Kingdom Bank – 13.8%
- SBM Bank – 13.7%
Equity Bank Kenya had informed its customers in January2023 that it was conducting a review of its lending rates. As part of this review, the bank implemented a risk-based pricing model, which resulted in lending rates ranging from 12.5 percent to 21.02 percent.
In March 2023, the Central Bank of Kenya (CBK) increased its benchmark lending rate to 9.5 percent, CBK. This decision was made as a counter-inflation measure and aimed to address rising inflationary pressures.
The objective was to bring down the inflation rate, which decreased from 9.2 percent in March 2023 to 7.9 percent in April 2023. However, it’s important to note that inflation has remained above the government’s targeted upper limit of 7.5 percent for 11 consecutive months.
According to a local publication, Business Daily, the higher cost of credit observed among major banks can be attributed to their strong pricing power, which is supported by factors such as a wide distribution network, the availability of multiple services, and well-established brands.
In contrast to larger banks, smaller lenders face the need to compete for customers which often leads them to offer relatively lower interest rates on credit.
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