Interest Rates Across Kenyan Banks Diverge After Central Bank Rate Reduction to 8.75%

Kenya’s commercial banking sector is operating within a narrower but still uneven lending environment in February 2026, with loan interest rates ranging from 10.21% to 19.05% and an overall average of 14.78%.

The spread in Kenya’s commercial bank loan interest rates follows the Central Bank of Kenya’s decision to lower the base rate to 8.75%, reshaping how lenders price credit across different customer segments.

What Happened

Interest rates across Kenyan banks in February 2026 moved into a new pricing cycle after the Central Bank Rate (CBR) was reduced to 8.75%. While this lowered the benchmark cost of borrowing, commercial lenders adjusted their own pricing using internal models tied to funding costs and borrower risk.

Citibank N.A. Kenya set the lowest lending rate at 10.21%, while Access Bank and Credit Bank priced loans at the upper end between 18.00% and 19.00%. The overall average stood at 14.78%, showing a wide dispersion in interest rate across Kenyan banks despite a common policy reference rate.

Key numbers in Kenya’s lending market

Central Bank Rate: 8.75% (February 2026)

Lowest bank lending rate: 10.21% (Citibank N.A. Kenya)

Highest lending range: 18.00%–19.05% (Access Bank, Credit Bank)

Average loan interest rates: 14.78%

Typical spread across banks: over 8 percentage points

Why Interest Rates Vary Across Kenyan Banks

The variation in interest rates across Kenyan banks is driven mainly by two structural factors:

• Cost of Funds – how much a bank pays to mobilise deposits or external funding
• Risk Profile of borrowers – the probability of default in each lending segment

Under Kenya’s Risk-Based Credit Pricing Model, banks start with a base rate, either the Central Bank Rate of 8.75% or the KESONIA interbank rate, and then add a risk premium depending on the borrower category.

Bank-By-Bank Breakdown of Loan Interest Rates

• Citibank N.A. Kenya (10.21%)

Citibank maintains the lowest loan interest rates in Kenya’s commercial banking sector. Its focus on multinational corporations and high-net-worth clients reduces default exposure. Lower reliance on expensive retail deposits also helps keep its funding costs contained.

• Standard Chartered & Stanbic Bank (~12.00%)

Both banks target prime corporate borrowers and low-risk retail customers. Their strong current and savings account bases reduce funding costs, allowing smaller risk premiums on loans.

• Absa Bank Kenya (13.87%)

Absa Bank sits in the mid-range of interest rates across Kenyan banks. Its pricing strategy balances corporate lending with retail expansion, supported by moderate risk exposure and competitive funding costs.

• Equity Bank & KCB Bank (~15.00%)

These institutions dominate mass-market lending in Kenya. Large exposure to SMEs and retail borrowers increases credit risk, which feeds into higher loan interest rates despite cheaper base funding after the CBK cut.

• Co-operative Bank & NCBA (~15.50%)

Both banks maintain strong SME and sector-specific lending portfolios. NCBA’s asset finance exposure and Co-operative Bank’s cooperative-linked lending model require tighter monitoring, contributing to slightly higher pricing.

• Access Bank & Credit Bank (18.00%–19.00%)

These lenders operate in higher-risk segments, including underserved SMEs and niche lending markets. Reliance on more expensive term deposits pushes up their cost of funds, leading to the highest interest rates in the system.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.