In the most recent regulatory report, small lenders including First Community Bank (FCB), Ecobank of Kenya, and HF Bank predominate the list of institutions offering lower interest rates. According to data from the Central Bank of Kenya (CBK), 27 out of 39 commercial banks increased their overall rates in the three months leading up to March.
The rates range from 9.5% at FCB to 17.6% at Credit Bank. Sidian had the highest rate in December at 14.6%. A flat rate of 9.5% is applied to all personal, business, and corporate loans at Credit Bank, a Shariah-compliant lender. With average interest rates of 14.2% and 14.1%, Absa and Equity Bank Kenya are ranked sixth and seventh, respectively.
However, expenditures like negotiation fees, legal fees, and insurance, which often raise the actual cost of servicing loans, are not taken into account in banks' disclosures.
Due to the smaller loan size compared to corporate loans, lenders which focus more on personal and SME banking typically charge higher fees. After receiving approval from the CBK last year, Absa will implement the risk-based pricing model for loans in the second half of the year. The greater implementation of risk-based pricing is expected to cause interest rates to reset higher this year. The National Bank of Kenya (NBK) and KCB Group, whose clearance is pending, said during the release of first-quarter results that they had received CBK approval allowing them to price loans based on borrower risk.
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