Central Bank Reveals the Cheapest and Most Expensive Lending Banks

The Central Bank of Kenya has disclosed the lending rates of banks in the country in a report that also indicates the huge disparity in the pricing of similar products by different banks.

The report from the regulator indicates that Bank of India on average is the cheapest lender followed by NIC bank while K-Rep and Habib banks are the most expensive lenders.

According to the data as reported by the Business Daily, some banks such as NIC, Chase and Bank of India offer the cheapest loans to corporates as they are charging less than the standard-base rate set by the CBK which is known as Kenya Bankers Reference Rate (KBRR).

KBBR is set at 8.54 per cent with banks allowed to load a premium on the base to cater for their operating expenses and cost of cash.

Equity bank is the cheapest among the large banks, for personal loans at 16.5 per cent compared to Barclays which is the most expensive at 19.9 per cent.

However in mortgages Barclays was the cheapest while Equity was the most expensive among the top five lenders.

The data is also said to disclose wide pricing margins by banks for similar products, with for instance Family Bank loads a premium of 26.2 per cent for micro loans while Equity charges 5.5 per cent above the KBBR.

Transnational Bank charges personal borrowers 26.3 per cent while Paramount Bank has priced its consumer loans at 9.5 per cent despite both being ranked as small lenders.

The standard-base rate was meant to introduce transparency in pricing of loans by banks with Central Bank requiring them to disclose the premium loaded on each loan to initiate competition in the industry which is expected to lead to lower interest rates.