Access Bank PLC has warned its customers against high interest rates, citing tough macro-economic conditions which have led to the continuous rise in short-term interest rates.
In a public notice the multinational commercial bank headquartered in Nigeria noted that the base lending rate would be revised to 16.63% p.a.
In addition to the base rate, there will be a margin addition, based on the customer’s credit risk.
According ot Access Bank, the revision in base rate would be effective as from 17th December 2023.
Additionally, the change will apply to all existing and new Kenya Shilling denominated credit facilities.
“We have endeavoured to cushion customers by maintaining the prevailing interest rates despite the challenges highlighted. However, the foregoing market conditions having persisted longer than anticipated, and the Bank has had to review the Risk-Based Pricing to align to the prevailing economic conditions,” the bank noted.
However, Access Bank assured their customers that they would continue to assess the market and advise accordingly in case of any further changes.
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Previous Revisions by Access Bank
Nonetheless, this is the second time this year that the bank has announced a change in base lending rate.
Following the increase of the Central Bank Rate on 26th June 2023 from 9.5% to 10.5%, Access Bank advised their customers on the adjustment of loan interest rates to14.63% plus a margin, based on the customer’s credit risk.
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The revision took effect from 8th August 2023.
Reports by CBK and National Treasury on Rising Interest Rates
A report produced by the National Treasury dubbed the Quarterly Economic and Budgetary Review, revealed that commercial banks increased loan interests.
Notably, this report meant tough economic times for Kenyans.
According to the report, local banks had an average lending rate of 13.8 per cent for the period ending September 30th.
This was a significant increase from August 2022, when the lending rate stood at 12.4 per cent.
Further, the latest data by the Central Bank of Kenya (CBK) shows that average commercial bank borrowing rates hit an 81-month high of 13.83 per cent in August.
This is despite the monetary authority retaining the base lending rate at 10.5 per cent in the most recent update.
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However, the rise in interest rates spells good fortunes for banks due to increase in profits
For instance, Co-operative Bank of Kenya posted a 7.5 per cent profit growth to Sh18.4 billion in the nine months that ended September.
The profits by Co-operative Bank were driven by higher interest income from loans.