Grapevine

Eyes on banks to cut loan rates as Equity leads the way

Pressure is mounting on commercial banks to reduce loan rates following a recent cut in the Central Bank Rate (CBR), with Kenya’s biggest bank by customer base, Equity Bank among the first to respond.

Central Bank of Kenya (CBK) lowered the CBR on August 6 from 13.00 per cent to 12.75 per cent in an effort to encourage lending, as banks have been hesitant to extend credit due to rising concerns over non-performing loans (NPLs).

Historically, Kenyan banks have been quick to raise rates whenever the CBK increases the benchmark rate, often citing rising costs of funds as justification.

This pattern has raised expectations that they would be equally responsive in lowering rates following the recent cut.

Equity Bank said it has reduced its reference rate from 18.24 per cent to 17.83 per cent, a move aimed at stimulating credit uptake amid a challenging economic landscape.