KCB has became the first bank to announce a reduction in its base lending rate to 13.85 per cent per annum, down from 14.6 per cent. The move comes shortly after the Central Bank of Kenya (CBK) cut its benchmark Central Bank Rate (CBR) by 75 basis points to 10 per cent.
The revised KCB lending rate, effective from April 11, 2025, for new loans and May 11, 2025, for existing facilities, is expected to make borrowing more affordable for businesses and individuals.
These revised rates will specifically cover Kenyan shilling-denominated facilities, a deliberate move that aligns with the bank’s broader strategy of encouraging local currency usage and maintaining financial system stability. This selective application ensures the benefits of lower rates reach domestic borrowers while mitigating foreign exchange risks.
KCB’s decision aligns with the CBK’s efforts to encourage private sector lending and boost economic activity. By reducing borrowing costs, KCB aims to provide businesses with greater access to capital, enabling expansion, job creation, and increased consumer spending, which are key drivers of economic recovery.
However, the bank clarified that the final interest rate for each customer would still depend on their creditworthiness under its Risk-Based Credit Pricing Model. This model assesses factors such as repayment history, financial stability, and overall risk profile to determine personalized rates, ensuring that pricing remains tailored to individual circumstances.
As one of Kenya’s largest financial institutions, KCB plays a pivotal role in implementing monetary policy transmission, ensuring that CBK’s adjustments translate into tangible benefits for borrowers.
With inflation getting under control and the economy showing signs of recovery, the reduction in lending rates marks a proactive step toward fostering a more vibrant financial environment.
As the effects of these changes unfold, businesses and consumers alike stand to gain from improved access to affordable financing, potentially accelerating growth in the months ahead.
