KCB & Co-op Bank ease borrowing costs with rate cuts
KCB has announced the reduction of its base lending rate from 15.6 percent to 14.6 percent per annum effective from February 10, 2025.
Bankers have started offering relief to borrowers with the Co-op Bank and KCB announcing cuts in loan rates following last week’s call by the Central Bank for lenders to reduce interest rates.
In statement on Monday, Co-op Bank said announced a two percent reduction in its loan rates effective immediately. The lender has adjusted its Base Lending Rate from 16.5 percent to 14.5 percent per annum.
Related
CBK moves to penalise banks for offering expensive loans
CBK cuts key rate to stem the tide of loan defaults
“Co-op Bank Group is pleased to announce a significant 2 percent reduction in our Base Lending Rate from 16.5 percent p.a. to 14.5 percent p.a… This reduction takes effect immediately. The effective lending rate will be the Base Lending Rate of 14.5 percent p.a. plus a margin of between 0 percent p.a. to 4 percent p.a. based on the individual customer’s credit profile,” reads part of its statement.
On its part, KCB announced the reduction of its base lending rate from 15.6 percent to 14.6 percent per annum, adding that, “this reduction takes effect from February 10, 2025.”
“This applies to all existing and new KShs-denominated facilities and excludes fixed-rate credit facilities.”
Central Bank has been pushing commercial banks to lower their lending rates in line with the progressive benchmark rate cuts by the apex bank since late last year.
In the latest benchmark rate review, CBK Governor Dr. Kamau Thugge announced that the regulator will start penalizing institutions that fail to accord borrowers cheaper loans.
“Under the amendment to the Banking Act recently enacted by Parliament, any bank that has not passed on the benefits of reduced costs of funds to reduce lending rates will be penalized in accordance with the law,” noted Dr. Thugge.
The latest move by lenders is meant to help stimulate credit growth in key sectors of the economy. “The reduction in lending rates is intended to stimulate credit growth to key sectors of the economy notably the MSMEs that are a critical engine to drive and sustain economic growth,” Co-op Bank explained.
The move by the Co-op Bank and KCB comes days after the CBK cut the base lending rate for the fourth time in a row to 10.75 percent. CBK also reduced the cash holdings requirement for banks to 3.25 percent in order to boost lending to the private sector.
