The Diamond Trust Bank (DTB) has lowered its lending rates on both new and existing loans after the reduction of the Central Bank Rate (CBR).
This comes following the Monetary Policy Committee (MPC) meeting held on Tuesday, April 8, in which the committee reduced the CBR by 75 basis points to 10.00 percent from 10.75 percent — the lowest the benchmark rate has been since May 2023.
In a notice on Friday, DTB announced a further reduction in the bank’s lending rates by up to 0.35% p.a., effective April 15, 2025, for new loans and May 1, 2025, for existing loans.
DTB reduces interest rates on new and existing loans
According to the bank, the final lending rate will be determined by customer-specific profiles under its Risk-Based Credit Pricing Model, applicable to Kenya Shilling denominated facilities only.
“This follows previous adjustments, bringing the total reduction to up to 1.96% since 1 January 2025,” said DTB.
“We remain committed to supporting businesses and individuals by providing competitive financial solutions to faster growth and success.”
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DTB had earlier in the year announced a reduction in its lending rates, a move the bank explained aimed at supporting businesses, particularly Micro, Small, and Medium Enterprises (MSMEs).
Effective January 1, 2025, the bank reduced its lending rates by up to 50 basis points, translating to a 0.50% decrease in interest rates on loans.
A further reduction of 37 basis points took effect on February 15, 2025, lowering lending rates by an additional 0.37%. These reductions also applied to all Kenya Shilling-denominated loans.
CBR reduced
While announcing the reduction of the CBR, the Central Bank of Kenya in a press release said the MPC concluded that there was scope for a further easing of the monetary policy stance to stimulate lending by banks to the private sector and support economic activity, while ensuring exchange rate stability.
To enhance the effectiveness of the monetary policy implementation framework, the MPC also approved the narrowing of the width of the interest rate corridor around the CBR from the current ±150 basis points to ±75 basis points.
“This will enhance stability of the interbank rate and align the rate closer to the Central Bank Rate (CBR),” read part of the release.
“In line with this review, the Committee also approved the adjustment of the applicable interest rate on the Discount Window from the current 300 basis points above CBR to 75 basis points, which will be the upper bound of the interest rate corridor.”
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CBK, at the same time, said that central banks in the major economies have continued to lower their interest rates, but at different paces depending on inflation and growth expectations.
Monetary Policy Commitee issues update on lending rates
Average lending rates have been declining gradually since December 2024, but private sector credit growth remains subdued, according to the Central Bank.
The MPC chairman and CBK Governor Kamau Thugge said that commercial bank lending to the private sector recorded a modest growth of 0.2 percent in March 2025 from a contraction of 1.3 percent in February.
This he said, reflects dissipation of exchange rate valuation effects on foreign currency denominated loans following the appreciation of the Shilling, and improved demand with declining lending interest rates.
In addition, average commercial banks’ lending rates declined to 15.8 percent in March 2025, from 16.4 percent in February and 17.2 percent in November 2024.
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