Equity Bank Reduces Interest Rates On Loans

Equity Bank has announced a reduction in interest rates on all new and existing Kenya Shilling-denominated credit facilities, following the recent decision by the Central Bank of Kenya’s Monetary Policy Committee (MPC) to cut the Central Bank Rate (CBR) from 12.75% to 12.0%.

The reduction, effective 18th November 2024, reflects Equity Bank’s proactive commitment to making credit more affordable and accessible to a wider range of customers, furthering financial inclusion and stimulating economic activity across Kenya. This is the 2nd time that Equity has reduced its lending rate within the last six months. It had reduced its rate in September 2024.

The reduced interest rate on all new and existing Kenya Shilling-denominated credit facilities will comprise the revised Equity Bank Reference Rate (EBRR) of 17.39% plus a margin, currently capped at a maximum of 8.5% per annum. This reduction applies to a wide range of credit products reflecting the bank’s commitment to fostering financial inclusion and supporting customers across diverse sectors.

“The reduction in our Equity Bank Reference Rate (EBRR) from 17.83% to 17.39% is in response to the MPC’s decision, which aims to maintain economic stability amid improving inflation trends and favorable economic indicators. With this reduction, all new and existing customers with Kenya Shilling-denominated loans will benefit from lower borrowing costs, providing immediate relief and supporting their financial aspirations. Equity Bank remains committed to broadening access to affordable credit, thereby empowering small businesses, entrepreneurs, and individuals to participate in Kenya’s growth journey,” said Dr James Mwangi, Equity Group Managing Director and CEO.

Dr Mwangi spoke about reducing the interest rate during the release of Equity Group’s financial results for Q3 2024 during an investor briefing last week. Lowering interest rates is a significant and beneficial move for the economy. By reducing the cost of borrowing, businesses will now access more affordable credit, which in turn lowers the overall operational costs. This financial relief for business owners not only supports their economic activities but also fosters the growth of enterprises, leading to the creation of employment opportunities.

For households, the lower interest rates will mean reduced borrowing costs, an increase in disposable income and providing families with more finance. This additional income can stimulate consumer spending, further driving economic growth. Overall, this change aligns with the government efforts to bolster the country’s economy by making both business and personal finance more accessible and sustainable.

This announcement follows an MPC meeting held on 8th October 2024, where the Committee highlighted an improved global economic outlook, continued easing of inflation in advanced economies, and a favorable domestic environment with stable food and fuel prices. These factors contributed to the reduction of the CBR to 12.0%, an action aimed at bolstering economic activity while maintaining exchange rate stability.

Equity Bank’s proactive rate adjustment aligns with these policy goals, allowing customers to benefit directly from a stable economic environment.

Last week, Equity Group announced a 9% year-on-year growth in its deposits to Kshs.1.3 trillion with its customer base now at 21.3 million. This growth in deposits has resulted in a 12% increase in cash and cash equivalents to Kshs.295.5 billion and 5% growth in investment securities to Kshs.468.1 billion resulting in an overall strong liquidity position of 55%. This performance is complemented by strong capital buffers with a core capital ratio of 15.9% and total capital ratio of 18.3% versus regulatory threshold of 10.5% and 14.5%, respectively. Shareholders’ funds grew by 17% to Kshs.227.0 billion strengthening the Group’s ability to support businesses and households in line with its private sector led Africa Resilience and Recovery Plan (ARRP).

As Kenya’s economy stabilizes, Equity Bank is dedicated to supporting customers’ financial goals and enabling inclusive economic development. By passing on the benefits of reduced interest rates.

Equity Bank aims to create an environment where businesses can expand, employment opportunities increase, and communities thrive, ultimately transforming lives, giving dignity and expanding opportunities for wealth creation.