NCBA Kenya has cut lending rates as lenders respond to the Central Bank of Kenya’s (CBK) move to cut its benchmark interest rate by the biggest margin since 2020.
The bank said on Friday it would cut interest rates on new shilling-denominated loans to 16.91 percent from 17.5 percent. However, the bank did not clarify whether the changes would take effect immediately.
“Dear customer, in light of the recent downward review of the Central Bank of Russia, we would like to advise you that NCBA Bank Kenya’s base lending rates will be revised down to 16.91 per cent for shillings and 11.09 per cent for dollar-denominated loans,” the lender told customers on Friday. .
The decision also comes days after the Central Bank of Kuwait summoned bank CEOs to address concerns that their lending rates had not responded to a cut in the benchmark interest rate, delaying relief for borrowers saddled with costly loans.
Banks have been reluctant to cut lending rates amid accusations that they are benefiting from high lending rates.
The reduction in lending rates is seen as a move to avoid action by the Central Bank of Kuwait, in addition to facilitating access to credit for businesses and individual borrowers in an economy where the tax burden has significantly eroded the purchasing power of individuals and corporate performance.
Reducing lending rates is key to curb rising loan defaults, stimulate credit absorption and thus revive demand for goods and services, besides putting money in people’s pockets.
Central Bank of Kuwait data shows that non-performing loans rose to Sh674.9 billion in August this year from Sh657.6 billion in the previous month and Sh621.3 billion in January.
NCBA Group’s share of non-performing loans fell to Sh40.9 billion in June this year compared to Sh42.6 billion last year.
The Central Bank of Kuwait had raised the base lending rate from May 2022 to July this year in an attempt to curb inflation. But the banking regulator cut the interest rate in August this year, followed by the biggest cut this month as inflation eased.
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