CBK names banks with friendly loan rates

The Central Bank of Kenya has published average bank lending rates showing the most expensive and least expensive lenders.

According to the list, Housing Finance and Family Bank have the lowest loan rates in the last quarter of 2015 while Middle East Bank and Guaranty Trust Bank were the most expensive.

Personal Loan category
In the personal loans category of between one and five years, K-Rep Bank at 25.7 per cent offered the most expensive credit as at mid-December 2015. Consolidated Bank comes second, charging 25.4 per cent interest as December 15.

The lender with the third cheapest personal loans is Middle East Commercial Bank at 24.2 per cent. UBA Bank takes the number four slot at 24.1 per cent on personal loans. Guaranty Trust Bank charged 23.7 per cent interest.

Conversely, in the personal loans category for between one and five years, Habib Bank Ltd at 8.4 per cent charged the cheapest rate. Guardian Bank Ltd at 14.1 per cent offered the second cheapest loans while National Bank of Kenya at 14.7 per cent was the third most affordable. Family Bank and Housing Finance share fourth slot.

Rates may be higher than stated

CBK notes that the loanees may actually be paying higher amounts than stated since the banks may levy other fees and charges, including administration, processing, valuation, legal and commitment fees, among others.

“Therefore the effective rates charged by individual banks may be higher than these published interest rates depending on the other fees and charges levied on loan products by the specific bank,” says the regulator.

“The actual rates are based on negotiations between the bank and the borrowing customers. It should be noted that the published interest rates only constitute banks’ lending rates.”

Business Loans
For business loans repayable between one and five years, K-Rep Bank at 27.2 per cent gave the most costly loans as at December 15. It is followed by Jamii Bora Bank at 24 per cent with Guaranty Trust Bank coming in third at 23.4 per cent.

Meanwhile NIC Bank at 22.7 per cent comes in at number four as the lender with the most costly loans. Transnational Bank is the fifth most expensive lenders at 23 per cent interest rate.

Conversely, UBA Kenya at 15.2 per cent offered the cheapest business loans while Gulf African Bank at 16 per cent was the second cheapest lender of business loans. First Community Bank at 16.8 per cent is the third cheapest lender of business loans.

Diamond Trust Bank at 17.2 per cent is the fourth cheapest lender while Bank of India at a rate of 17.5 per cent is the fifth cheapest lender.

For the overall average weighted lending rate for each commercial bank which represents the weighted average rate across all loan categories (corporate, business and personal) and maturities (overdraft, 1-5 years and over 5 years) Middle East Commercial Bank at a rate of 24.6 per cent is the most expensive lender.

It is closely followed by K-Rep Bank at 24.2 per cent which makes it the second most costly lender with Guaranty Trust Bank at a rate of 23.8 per cent becoming the third most expensive lender. Credit Bank at a rate of 22.5 per cent is the fourth mostly costly lender while I&M Bank at 20.8 per cent is the fifth most costly lender.

The move is meant to promote competition and transparency in pricing of loans and reign in on high interest.