NAIROBI, Kenya – Smaller banks in Kenya are charging higher interest rates on loans as they incur increased costs to attract deposits, putting pressure on borrowers seeking credit.
Credit Bank recorded the highest average lending rate among the banks in August at 19 per cent, followed by Bank of Africa Kenya and Access Bank, which each charged an average of 17 per cent.
The higher lending rates come as banks compete for deposits, increasing their cost of funds and putting pressure on the rates charged to borrowers.
Bankers Expect CBK To Hold Rate At 8.75 Per Cent
The Kenya Bankers Association (KBA) expects the Central Bank of Kenya (CBK) to retain its key interest rate at 8.75 per cent when the Monetary Policy Committee (MPC) meets tomorrow.
The association says maintaining the rate would provide greater stability for banks and borrowers while supporting lending to the private sector.
Rate Hold Expected To Support Economic Activity
KBA says retaining the Central Bank Rate would help support private sector credit and economic activity.
A stable policy rate could also provide banks with greater certainty as they price loans and manage their funding costs.
The MPC’s decision will be closely watched by lenders and borrowers amid efforts to boost private sector lending and sustain economic growth.
