KCB cuts rates in boon for borrowers

Customers of KCB Bank Kenya, the country’s largest lender by assets, are set to benefit from lower borrowing costs following the lender's announcement on Wednesday that it would reduce its base lending rate.

The move comes swiftly after the Central Bank of Kenya (CBK) ="https://www.standardmedia.co.ke/business/business/article/2001515934/cbk-cuts-key-rate-again-as-bad-loans-climb-to-record-sh700b"> announced a cut

In a public notice, KCB stated it would lower its base lending rate from 14.6 per cent to 13.85 per cent per annum. The new rate will take effect for new loan facilities from April 11, 2025, and for existing facilities from May 11, 2025.

KCB clarified that the final lending rate for individual customers would be based on a customer-specific margin added to this new base rate. The reduction applies to Kenya Shilling-denominated loans, excluding fixed-rate credit.

The bank highlighted its continued implementation of the risk-based credit pricing model, which it anticipates will further enable customers with strong credit profiles to access more affordable loans.

The lender said the rate cut was expected to support its clientele and stimulate broader economic activity in the country. “The reduction is expected to further support our customers and stimulate economic activity,” said KCB. 

The swift response from KCB signals a potential trend among commercial banks following the CBK's decision to ease its monetary policy stance. Borrowers across various sectors will be watching closely to see if other lenders follow suit, potentially leading to a welcome reduction in the cost of credit.

The CBK on Tuesday lowered its benchmark lending rate, the Central Bank Rate (CBR), by 75 basis points to 10.00 per cent down from 10.75 per cent.

The central bank's latest rate cut is intended to encourage commercial banks to increase lending to the private sector and support a projected economic growth of 5.4 per cent this year, up from an estimated 4.6 per cent last year.