Co-operative Bank of Kenya has defied the Central Bank of Kenya’s stranglehold on banks’ pricing reaping benefit of a liberal interest rate regime.
The interest rate charged by banks on loans to private sector customers minus the interest rate the lenders pay depositors for their deposits – has barely widened.
Nonetheless, banks have continued to report astronomical profits amidst a tough economic environment occasioned by the pandemic, drought, the Russia-Ukraine conflict and election jitters.
Co-operative has been able to get cheap, long-term financing at rates as low as between four and five per cent from international financing institutions.
Data from CBK shows that last year, banks and non-banking financial institutions increased their long-term funds to Sh247.7 billion compared to Sh213.5 billion in 2020.
Co-op Bank’s borrowed funds, mostly long-term credit lines from development partners, grew from Sh21.2 billion in 2017 to Sh42.9 billion by end of last year.
The funds have come from such institutions as the World Bank’s IFAD and IFC, European Investment Bank, AFD and KFW.