Kenyan commercial banks have adjusted their weighted average lending rates across various loan categories and maturities for July 2024, reflecting ongoing economic pressures and the Central Bank of Kenya’s (CBK) monetary policies aimed at stabilizing the financial market. The CBK released a detailed report outlining these changes, which reveal significant variances among financial institutions and loan types.
The report indicates notable adjustments across personal, business, and corporate loan categories, with Premier Bank Kenya Limited offering the lowest overall lending rate at 9.00%. This positions Premier Bank as the most affordable option for individual borrowers seeking loans. On the higher end, Middle East Bank (K) Limited has set its overall lending rate at 20.96%, marking it as the costliest for personal loans in the market.
For personal loans, banks have adjusted rates depending on the loan maturity period. UBA Kenya Bank Limited offered the lowest rates for overdrafts at 3.83%, followed closely by Kenya Ecobank Kenya Limited with 4.75%, while the highest rates were provided by Middle East Bank Kenya Limited at 24.36%.
Loan rates for maturities ranging from 1 to 5 years show considerable variation. Premier Bank Kenya Limited offers a competitive rate of 9.00%, while Credit Bank PLC charges the highest rate in this category at 23.22%. For loans with terms exceeding five years, SBM Bank Kenya Limited leads with a rate of 21.79%, compared to Premier Bank Kenya Limited, which maintains a lower rate of 9.00%.
The lending rates for business loans show significant disparities, reflecting the economic pressures faced by businesses in Kenya. The data reveals that business loans, especially for small and medium-sized enterprises (SMEs), are facing steeper borrowing costs. For overdraft facilities, Guardian Bank Limited registered the lowest rate at 5.80%, while Credit Bank PLC posted the highest at 22.05%.
For loans with a maturity of 1-5 years, Premier Bank Kenya Limited provided the lowest rates at 9.00%, compared to Commercial International Bank (CIB) Kenya Limited at 22.32%. Long-term business loans, those over five years, had varied rates, with Premier Bank Kenya Limited offering 9.00% and Middle East Bank Kenya Limited at 27.00%.
Corporate loans, which typically involve larger sums, also experienced an upward adjustment in interest rates. The overdraft rates ranged from a low of 4.65% by Ecobank Kenya Limited to a high of 22.28% by Middle East Bank Kenya Limited.
For loans maturing between 1-5 years, the rates fluctuated between 9.00% offered by Premier Bank Kenya Limited and 23.67% by Credit Bank PLC. Loans maturing over five years had even higher rates, with Premier Bank Kenya Limited offering the lowest rate at 9.00%. These rates suggest more favorable conditions for corporate borrowers from this institution. Conversely, Middle East Bank (K) Limited maintains the highest corporate lending rate at 22.12%. which may reflect the institution’s cautious approach amid economic uncertainties.
The CBK’s report on the weighted average lending rates reveals the diverse landscape of loan pricing across Kenya’s banking sector. The variation in lending rates across different banks highlights the risk assessments that banks are employing in the current economic climate. Factors influencing these rates include the borrower’s creditworthiness, the bank’s liquidity position, and the prevailing economic conditions.
The disparities in lending rates across different banks and loan categories highlight the importance for borrowers to carefully consider their options, while for banks, maintaining competitive rates will be key to attracting and retaining customers in an increasingly challenging economic landscape.
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