Co-operative Bank Group has announced a two per cent reduction in its base lending rate from 16.5 per cent to 14.5 per cent, passing the much-needed rate cuts benefit to borrowers.
It becomes the first lender to make such a significant cut after last week’s Central Bank of Kenya’s move to lower the Central Bank Rate (CBR) by 50 basis points to 10.75 per cent from 11.25 per cent, to boost credit to the private sector.
The reduction by Co-op takes effect immediately, Group managing director and CEO Gideon Muriuki said, as the lender moves to stimulate credit growth to the private sector and households.
The effective lending rate will be the base lending rate of 14.5 per cent per annum plus a margin of between zero per cent to four per cent, per annum, based on the individual customer’s credit profile.
“The reduction in lending rates is intended to stimulate credit growth to key sectors of the economy notably the MSMEs that are a critical engine to drive and sustain economic growth,” Muriuki said.
The move by Coop Bank marks a continuation of last year where together with its subsidiary–Kingdom Bank headlined the offering of cheaper credit to customers.
The reduction in the lending rates by the Nairobi Securities Exchange listed lender is expected to trigger a wide market response with other banks taking the cue and likewise cutting their rates.
Reduction in lending rates across the board by banks will come as a most timely relief to borrowers and the economy as a whole, especially at this time where majority of Kenyans are grappling with a high cost of living, despite low inflation numbers by government.
