Equity Bank Lowers Interest Rates Following Central Bank Decision
Nairobi, Kenya – 18th November 2024:
Equity Bank has announced a significant reduction in interest rates on all new and existing Kenya Shilling-denominated credit facilities. This move comes in response to 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 new rates are effective from 18th November 2024.
The reduction marks the second time within six months that Equity Bank has lowered its lending rates. The previous reduction occurred in September 2024. This initiative underscores the bank’s commitment to making credit more affordable and accessible, furthering financial inclusion, and stimulating economic activity across Kenya.
The revised interest rates will feature the updated Equity Bank Reference Rate (EBRR) of 17.39% plus a margin, currently capped at a maximum of 8.5% per annum. This adjustment applies to a wide range of credit products, reflecting Equity Bank’s dedication to supporting customers across diverse sectors.
Dr. James Mwangi, Equity Group Managing Director and CEO, stated:
“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.”
Dr. Mwangi highlighted the impact of the rate reduction during the release of Equity Group’s financial results for Q3 2024 at an investor briefing last week. He emphasized that lowering interest rates is a beneficial move for the economy, as it allows businesses to access more affordable credit, reducing overall operational costs. This financial relief supports economic activities, fosters enterprise growth, and creates employment opportunities.
For households, lower interest rates translate to reduced borrowing costs and increased disposable income, enabling families to have more financial flexibility. This additional income can stimulate consumer spending, further driving economic growth. This change aligns with the government’s efforts to bolster the country’s economy by making both business and personal finance more accessible and sustainable.
The MPC meeting on 8th October 2024 noted 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 decision to lower the CBR to 12.0%, aiming to bolster 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 a 5% growth in investment securities to Kshs.468.1 billion, leading to a strong liquidity position of 55%.
The performance is complemented by strong capital buffers, with a core capital ratio of 15.9% and a total capital ratio of 18.3%, surpassing the regulatory thresholds 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 remains 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.
