NCBA Bank Cuts Lending Rate by 1%

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NCBA Bank has lowered its base lending rate by one percentage point, trimming it from 15.34% to 14.34% per annum, effective immediately for new loans.

The move follows the Central Bank of Kenya’s recent decision to cut the Central Bank Rate (CBR) to 10%, a step aimed at easing the cost of credit and boosting borrowing in a sluggish economy.

NCBA customers with variable-rate loans will see the new rate reflected in their repayments from May 1, 2025, while those on fixed-rate loan plans won’t be affected by the change.

This latest adjustment marks a total reduction of 3.20% in NCBA’s base lending rate since August 2024. Over the same period, the Central Bank has slashed the CBR by 3.00 percentage points, bringing it down from 12.75% to 10.00%.

The CBK’s rate cuts are part of an effort to encourage banks to lend more to businesses and households, with the hope of supporting economic growth amid a stabilizing shilling and easing inflation.

However, the regulator has voiced concern over banks being slow to pass on the benefits of these cuts to borrowers.

In December 2024, the average lending rate across Kenyan banks stood at 16.89%, despite the CBR having been lowered to 11.25% at the time. The lag in rate transmission has contributed to sluggish private sector credit growth, which shrank by 1.1% in the year to November, well below the Central Bank’s target range of 12–15%.

In response, the CBK has announced that starting June 2025, commercial banks that fail to align their rates with the CBR will face daily financial penalties.

Non-compliant lenders could be fined up to Sh 20 million, or three times the profits earned from overcharging. On top of that, they’ll incur a Sh 100,000 fine per day until they comply. Senior executives may also face personal liability, with possible fines of up to Sh 1 million.

The crackdown follows inspections earlier this year, where the CBK identified at least 14 banks that hadn’t adjusted their rates, despite operating under risk-based pricing models designed to reflect market conditions.

CBK Governor Kamau Thugge had previously warned lenders in December and again in February, urging them to act fairly and reduce borrowing costs in line with policy changes.

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