Middle East and K-Rep banks listed as most expensive

By Ronald Owili

The Central Bank of Kenya has published the interest rate that commercial banks are charging borrowers.

The Middle East Commercial and K-Rep Banks charge the highest interest rates of 26.4 and 24.2 percent respectively while Housing Finance offers the cheapest loans. On average, banks are charging 18.3 percent on loans.

The credit pricing in the country by commercial banks has been a cause of concern for many. With banks reluctant to reduce lending rates spur borrowing among consumers, the government has been forced to slash domestic borrowing to finance the budget.

According to CBK, lack of transparency in credit pricing by lenders can expose borrowers to high lending rates.

The Central Bank that has been urging banks to reduce lending rates has now opted to publish the rates that financial institutions price their loans.

According to the publication, the average weighted lending rates comprising three loan products namely, personal, business and corporate lending prices Middle East commercial bank as having the highest rate of 24.6%, followed by K-Rep bank at 24.4% and Guaranty Trust bank at 23.8%.

On the lower side, Housing Finance Company charges 15.2%, Family Bank 15.5% and Guardian Bank 15.6%. When it comes to the six largest banks in Kenya, Equity Bank prices its loans most expensively at 19%, Barclays Bank and StanChart Bank both charge 18.5%, CFC Stanbic 17.8%, Co-operative Bank charges 17.5% and KCB is the cheapest at 17.3%.

CBK says in a statement: “Publication of average lending rates for commercial banks is expected to increase transparency and enable the borrowing public to making informed borrowing decisions.

CBK says the published interest rates only constitute banks’ lending rates, noting that banks may levy other fees and charges, which could push up the cost of loans.

CBK List

  • Middle East Commercial Bank charges 24.6 percent
  • K-Rep Bank charges 24.4 percent
  • Guaranty Trust bank charges 23.8 percent
  • Equity Bank prices its loans at 19 percent
  • Barclays Bank and StanChart Bank charge 18.5 percent
  • Co-operative Bank charges 17.5 percent
  • KCB charges 17.3 percent
  • Housing Finance offers the cheapest at 15.2 percent
  • Family Bank charges 15.5 percent
  

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