Kenya Commercial Bank (KCB) and Co-operative Bank have announced a reduction in their base lending rates in response to recent monetary policy adjustments by the Central Bank of Kenya (CBK).
KCB has revised its base lending rate downwards from 15.6 percent to 14.6 percent per annum, with the new rate taking effect from February 10, 2025. The bank clarified that the final interest rate charged to borrowers will depend on individual credit risk assessments, determined through the institution’s Risk-Based Credit Pricing Model. The changes will apply to all loans denominated in Kenyan shillings, except for those with fixed interest rates.
Similarly, Co-op Bank Kenya has lowered its base lending rate from 16.5 percent to 14.5 percent. In a statement, the bank explained that customers’ final borrowing rates will vary based on their creditworthiness, with a margin of between zero and four percent added to the base rate.
“We have revised our Base Lending Rate from 16.5% to 14.5% per year, effective immediately. The final interest rate will be determined by adding a margin of between 0% and 4%, based on the customer’s credit profile,” Co-op Bank stated.
These adjustments come after CBK announced a reduction in its Central Bank Rate (CBR) by 0.5 percentage points to 10.75 percent, a move aimed at easing borrowing costs and stimulating private sector lending. In addition, the regulator lowered the Cash Reserve Ratio (CRR) to 3.25 percent, a shift expected to release approximately Ksh 57 billion into the economy for lending purposes.
The latest policy changes follow a series of rate cuts implemented in late 2024 to boost economic activity amid concerns over slowing growth. With KCB and Co-op Bank leading the way, other financial institutions are expected to follow suit in adjusting their lending rates in line with the CBK directive.
