The National Bank of Kenya (NBK), a subsidiary of Access Bank PLC, has announced it will transition from its existing base rate pricing model to a risk-based loan pricing framework. The new model, set to take effect from August 2025 for new loans and September 2025 for existing loans, is designed to better align lending rates with individual borrower risk profiles.
The bank disclosed the changes in a public notice, stating that the move aims to enhance credit risk management and align with industry-wide reforms that encourage prudent lending practices.
Under the new pricing structure, loans will be priced based on a reference rate of 12.9%, plus a risk premium determined by the borrower’s credit profile. This marks a departure from the previous approach, where loan rates were pegged to the NBK Base Rate regardless of the borrower’s risk level.
“This new pricing model will apply to all loans currently priced off the NBK Base Rate,” the notice read, emphasizing that both new and existing clients will be affected over a staggered timeline.
Risk-based loan pricing is a strategy increasingly adopted by financial institutions in which loan interest rates are adjusted depending on the assessed creditworthiness of the borrower. This means that lower-risk clients may enjoy more competitive rates, while higher-risk borrowers may be charged a premium.
The model is intended to enhance financial inclusion by making credit more accessible to diverse segments of the population, while also safeguarding banks from excessive exposure to defaults.
In Kenya, the move comes in the wake of ongoing reforms in the banking sector aimed at promoting sustainable lending practices and curbing non-performing loans, which remain a concern among tier-two and tier-three banks.
Kenya’s average bank lending rate eased slightly to 15.28 percent in June 2025, down from 15.44 percent in May, according to the latest data from the Central Bank of Kenya (CBK). The marginal decline reflects a cautious adjustment by commercial banks amid ongoing monetary tightening and rising credit risks in the economy.
Despite the dip, lending rates remain elevated compared to previous years, driven by the CBK’s sustained high benchmark rate of 13.0 percent aimed at taming inflation and stabilizing the Kenyan shilling. The high cost of credit continues to strain households and businesses, particularly small and medium enterprises (SMEs), which have limited access to affordable financing options.
According to the public notice issued by the National Bank of Kenya (NBK), the transition to the new risk-based loan pricing model will be implemented in two phases. The new structure will first take effect on 1st August 2025 for all new loan applications, after which it will be extended to existing loans currently priced under the NBK Base Rate starting 1st September 2025.
NBK has urged customers to seek further clarification from the bank’s contact centers or visit their branches to understand how the changes may impact their existing or future loans.
In March 2024, Access Bank Plc, one of Nigeria’s largest and fastest-growing lenders, initiated a deal to acquire National Bank of Kenya (NBK) from KCB Group, marking a significant expansion of its footprint in East Africa.
The acquisition formed part of Access Bank’s broader strategy to become a leading pan-African financial services provider. The transaction was finalized in June 2024, after receiving all necessary regulatory approvals from the Central Bank of Kenya (CBK), the Competition Authority of Kenya (CAK), and other relevant bodies.
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