Equity Bank has revealed plans to revise Bank Reference Rates for its customers as part of its fresh review.
Equity Group’s Managing Director & Chief Executive Officer Dr. James Mwangi made the revelation in a statement issued on November 12 during the bank’s 2024 Quarter 3 (Q3) Investor Briefing & Release of Financial Results.
This comes after the bank earlier in September announced revised rates which it dropped from 18.24 percent to 17.83 percent.
Back then, Equity Bank stated that the review came in response to the adjustment of the Central Bank Rate (CBR) on August 6, 2024, which was lowered from 13 percent to 12.75 percent.
The level of the CBR is reviewed and announced by the Monetary Policy Committee (MPC) at least every two months and its movements, both in direction and magnitude, signal the monetary policy stance.
In his statement on Tuesday, Mwangi said that the bank will further announce its second reduction of the interest rate to encourage loan uptake.
The CEO made the remarks while highlighting that the lender is among tier 1 banks that offer the most affordable interest rates in Kenya.
“We are proud that among Tier 1 banks, we now offer the most affordable interest rates in Kenya. We made the choice to stand by our customers by absorbing costs rather than passing them on. As we look to the future, we are committed to easing the burden on households and businesses,” said Mwangi.
“Within the next few days, we’ll announce our second interest rate reduction to encourage loan uptake. We are keen to support the government to stimulate the economy and drive sustainable growth.”
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Equity Bank Q3 Profit
The Equity Group CEO made the announcement when also revealing that the group has registered a profit growth of 13 per cent to Ksh40.9 billion up from Ksh36.2 billion for the period ended 30th September 2024 compared to a similar period last year.
Regional businesses on the other hand contributed 51% of profit before tax and 48% of total assets to reach Kshs1.7 trillion.
In addition, Deposits grew by 9% to Ksh1.3 trillion up from Ksh1.2 trillion while earnings per share grew by 13% to Ksh10.40 up from Ksh9.20.
The announcement by Dr. Mwangi on the reduction of interest rates by the Equity Bank means that this will be the second review of the interest rates within three months.
ADVERT
Back on September 9, the bank revealed that the rate would drop from 18.24 percent to 17.83 percent, effective immediately.
“We wish to inform our customers and the general public that we have reduced Equity Bank’s Reference Rate (EBRR) from the current 18.24% to 17.83% effective 9th September 2024,” read the statement in part.
“Consequently, the final interest rate will consist of Equity Bank’s Reference Rate of 17.83% plus a margin, currently capped at a maximum of 8.5% per annum.”
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The bank said that the adjustment would apply to all new Kenya Shilling-denominated credit facilities, adding that it would continue to monitor market conditions and provide updates if further changes are necessary.
Bank Reference Rates
Banks’ Reference Rate (BRR) is the base rate for lending by commercial banks and microfinance banks as well as for pricing mortgage products.
The Kenya BRR was introduced in July 2014 following discussions between commercial and microfinance banks, mortgage finance institutions, the Kenya Bankers Association (KBA), the Central Bank of Kenya (CBK), and the National Treasury.
BRR is part of their recommendations to explore ways of enhancing the supply of private-sector credit and mortgage finance in Kenya.
The primary purpose of the BRR in Kenya is to ensure that banks are transparent with respect to the cost and pricing of their products.
Notably, this is made possible through the KBRR framework that requires banks to disclose and explain to their customers the effective base rate (KBRR) and any additional premium (K) above the base rate.
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