Consumers may benefit from a further drop in lending rates as more banks move to reduce their charges this month. According to Kenya Commercial Bank’s (KCB) Chief Financial Officer, Joshua Oigara, commercial banks may reduce their rates even further from the current 20% average to as low as 16% by the end of this year.
“If there are further cuts from the Central Bank, then commercial banks might reduce their lending rates even more,” said Steve Ogada, a Fixed Income Dealer at Sterling Capital Limited. He noted, however, that commercial banks are driven by capitalism and some would not give in to the changes easily unless they were forced to do so based on the rate of inflation and the CBK’s decision. He also said that some banks would most likely maintain their current lending rates.
Banks like Barclays, KCB, Equity, Diamond Trust and Citibank have already lowered their lending rates. Others like Prime Bank and CFC Stanbic have both made announcements to to drop their lending rates to 22.5% from their current 24%. A report by the CBK states that lower rates tend to spur a competitive environment among lenders in the country. Ogada said that regardless of the outcome, consumers will still have a variety of options to choose from and the current lower rates will encourage more borrowing.