Information on the cost of loan by Central Bank of Kenya (CBK) indicates borrowers pay between 9 to 20.96 per cent on loans, depending on which lender one banks with.
The less expensive rate is offered by Premier Bank of Kenya charging 9 per cent while Middle East Bank offers 20.96 per cent making its loans more expensive in the Kenyan market. Among the tier one banks, ABSA Bank Kenya, NCBA Bank Kenya, Stanbic, and Standard chartered loans are charged at 19.82 per cent, 19.12 per cent, 17.49 per cent, and 17.32 per cent respectively.
KCB Bank Kenya charges 16.40 per cent on its loans while Equity Bank Kenya and Co-operative bank takes away 16.02, and 15.18 per cent from their loans. A customer taking Sh1 million with Absa Bank Kenya will pay Sh46,000 more compared to a Co-operative bank customer going for similar loan.
According to data, among the lenders offering top ten least expensive loans are Premier Bank, Access, Diamond Trust, Consolidated, Kingdom, Guardian, Ecobank, Bank of India, Co-operative Bank and Paramount bank.
The top ten higher rates loans are offered by Bank of Africa, Victoria Commercial, NCBA Bank, Commercial International Bank, Sidian, ABSA, SBM, HFC, Credit and the Middle East.
In August, the Monetary Policy Committee lowered the Central Bank Rate (CBR) to 12.75 per cent after the rate stagnated at 13 per cent upon three consecutive reviews in February, April and June of this year.
DR Kamau Thugge, Chairman Monetary Policy Committee said the high CBR in the three months upto June was to ensure that overall inflation remains stable around the mid-point of the target range in the near term, while ensuring continued stability in the exchange rate.
State of the Banking Industry Report 2024 by the Kenya Bankers Association says the growth in banking system’s gross lending remained entrenched on a double-digit level for the second consecutive year, significantly higher than the single-digit levels recorded between 2016 and 2021.
Loans and advances (net) grew by 15.3 percent in 2023, to close at Ksh. 4.18 trillion from Ksh. 3.63 trillion in 2022 overall market trend on the growth of loans and advances, heterogeneity across banks was evident.
Among the large and medium banks, which jointly accounted for 91.31 percent of total industry loans in 2023, grew by 17.4 percent and 13.8 percent, respectively. Loans and Advances by small banks grew by 13.8 percent over the period.
“The growth in industry loans and advances was broad-based, and largely driven by growth observed in the Financial Services, Agriculture, Trade and Manufacturing, on account of increased credit demand in services and productive sectors to support the working capital needs However, the capacity of a bank to grow its loans in 2023 was largely determined by its capital to asset ratio position, such that banks with higher capital ratios generally recorded higher loan growth compared to those with lower capital ratios.”