Equity Bank has reduced interest rates on all new and existing Kenya shilling-denominated credit facilities. The move follows the Central Bank of Kenya’s (CBK) recent decision to lower the Central Bank Rate (CBR) from 12.75% to 12.0%.
The rate reduction was implemented on Monday, November 18, 2024, marking the second such adjustment in the past six months, after a similar cut in September 2024.
In a statement released on Monday, the bank announced that the new interest rate for both new and existing Kenya shilling-denominated loans would be based on the revised Equity Bank Reference Rate (EBRR) of 17.39%, plus a margin capped at a maximum of 8.5% per annum.
“The reduction in the EBRR from 17.83% to 17.39% reflects the Monetary Policy Committee’s decision to maintain economic stability amid improving inflation trends and favorable economic indicators. This will result in lower borrowing costs for all customers with Kenya shilling-denominated loans, providing immediate financial relief and supporting their aspirations. Equity Bank remains committed to expanding access to affordable credit, enabling small businesses, entrepreneurs, and individuals to contribute to Kenya’s growth,” Dr James Mwangi, Equity Group Managing Director and CEO stated.
Mwangi had previously discussed the interest rate reduction during the release of Equity Group’s Q3 2024 financial results at an investor briefing last week.
“Lowering interest rates is a significant and beneficial move for the economy. By reducing the cost of borrowing, businesses can access more affordable credit, which in turn lowers operational costs. This financial relief supports business activities and fosters enterprise growth, creating more job opportunities,” the statement read.
“For households, reduced interest rates will mean lower borrowing costs, increased disposable income, and greater access to finance. This boost to household finances is expected to drive consumer spending and contribute to broader economic growth. This change aligns with the government’s efforts to strengthen the economy by making both business and personal finance more accessible and sustainable.”
On October 8, 2024, CBK highlighted an improved global economic outlook, ongoing inflation easing in advanced economies, and a favourable domestic environment with stable food and fuel prices. As a result, CBK announced the CBR reduction to 12.0%.
Equity Bank also reported a strong financial performance last week, announcing a 9% year-on-year growth in deposits, reaching Ksh 1.3 trillion. The bank’s customer base now stands at 21.3 million.
The growth in deposits contributed to a 12% increase in cash and cash equivalents, which now total Ksh 295.5 billion. Investment securities grew by 5% to Ksh 468.1 billion, leading to an overall strong liquidity position of 55%.
Shareholders’ funds increased by 17% to Ksh 227.0 billion.