Equity Bank Reduces Loan Interest Rates for 3rd Time

Equity Bank Limited has announced a reduction in interest rates on all new and existing Kenya Shilling-denominated credit facilities, effective February 13th, 2025, for new loans and from the 1st of March for existing loans by 3%.

In a statement on February 12, Equity Bank said that the reduction follows the recent decision by the Central Bank of Kenya’s Monetary Policy Committee (MPC) to cut the Central Bank Rate (CBR) by 50 basis points to 10.75% from 11.25% and the Cash Reserve Ratio (CRR) by 100 basis points to 3.25% from 4.25%.

“This reduction reflects Equity Bank’s commitment to making credit more affordable and accessible, furthering financial inclusion and stimulating economic activity across Kenya,” read part of the statement.

The reduced interest rates will comprise a revised Equity Bank Reference Rate (EBRR) of 14.39% plus a margin (based on specific customer risk profile).

In addition, this 300 basis points (3%) reduction applies to a wide range of credit products.

“We understand the financial pressures facing Kenyans today, and we’re committed to doing our part to ease that burden. This rate cut is about more than just lower interest rates; it’s about opening doors for Kenyans to invest in their businesses, support their families, and their livelihoods,” said Moses Nyabanda, Managing Director, Equity Bank (Kenya) Limited.

Equity Bank Lowers Interest Rates For 3rd Time

This is the 3rd time that Equity has reduced its lending rate within the last six months after earlier reductions in September and November 2024.

Also Read: CBK Reveals Banks with Lowest and Highest Loan Rates in Latest Report 

The bank said that lowering interest rates is expected to have a positive impact on the economy as by reducing the cost of borrowing, businesses will have access to more affordable credit, lowering operational costs and fostering growth and job creation.

For households, lower rates mean reduced loan repayments, increasing disposable income and stimulating consumer spending, the lender added.

The MPC decision by the Central Bank of Kenya (CBK), taken at its meeting on February 5, 2025, was based on its observation that the reduction in the CRR will release additional liquidity to banks, which is expected to lower the cost of funds and lending rates, ultimately supporting growth of credit to the private sector.

Equity bank said that its rate adjustment aligns with these policy goals, allowing customers to benefit directly from the intended economic stimulus.

“As the Kenyan economy evolves, Equity Bank remains dedicated to supporting customers’ financial goals and enabling inclusive economic development. By passing on the benefits of reduced interest rates, Equity Bank aims to create an environment where businesses can expand, employment opportunities increase, and communities thrive,” the bank added.

CBK on interest rates

Lower interest rates are expected to boost the economy by providing businesses with more affordable credit, reducing operational costs and driving growth and job creation.

Also Read: CBK Lowers Interest Rates on Loans Again, Puts Exploitative Banks on Notice

The reduction of loan interest rates by Equity comes after CBK revealed that the average lending rate remained relatively high in December, despite multiple rounds of cuts, exacerbating the cash crunch and hindering business activities and consumer spending.

According to the Central bank, the banking sector has contended that various factors, including the cost of funds and credit risk assessments, influence their lending rates.

Elsewhere, Co-operative bank reduced its interest lending rates from 16.5% p.a to 14.5% p.a on Monday, February 11, effective immediately.

The Kenya Commercial Bank (KCB) on its part reduced its base lending rate from 15.6% to 14.6% per annum.

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