KCB customers to get cheaper loans as lender cuts rate in response to MPC stance
It says reduction aims to provide more affordable credit and stimulate economic activity across the country
Kenya Commercial Bank (KCB) has lowered its lending rate in response to the decision by the Monetary Policy Committee (MPC) to adjust Central Bank Rate (CBR) by 75 basis point to 10.00 per cent.
In a notice, KCB said it has cut its rate from 14.6 per cent to 13.89 per cent per annum, adding this will take effect from April 11 for new loans and May 11 for existing loans.
“The reduction aims to provide more affordable credit and stimulate economic activity across the country,” it added.
However, KCB also indicated that the final lending rate will be determined by customer-specific credit profiles under its Risk-Based Credit Pricing Model, applicable to Kenya-Shilling denominated accounts only.
While lowering the CBR, for the fifth time, the MPC, said it aims at stimulating lending by banks to the private sector and support economic activity, while ensuring exchange rate stability.
While the CBR has been coming down since August last year, most commercial banks have resisted abandoning the risk-based credit pricing model thus retaining lending rates still considered to be high.
According to the MPC, which is chaired by Central Bank Governor Kamau Thugge, average commercial banks’ lending rates declined to 15.8 percent in March 2025, from 16.4 percent in February and 17.2 percent in November 2024 with lending to the private sector growing by a modest 0.2 per cent from a contraction of 1.3 per cent in February 2025.
Dr Thugge, who has been piling pressure on bank CEOs to adjust lending rates, revealed on Wednesday that the MPC is reviewing the risk-based pricing model with the banks and expect to provide updated guidance by the next meeting, scheduled for June.
Equity Bank CEO Dr James Mwangi, whose bank has also been responsive to the MPC stances on lending to the private section, however, defends risk-based pricing, saying in a past forum that its objective is to be as inclusive as possible (by giving) everybody a chance to borrow based on their risk and create an environment of rewarding people with financial discipline.
