In a notice published on Monday, the Nigerian lender said that it will adjust its lending rate to 14.63 percent up from the current 14.22 percent with effect from August 8. 

The CBK on June 26 raised the central bank rate (CBR) from 9.5 percent to 10.5 percent — the highest point in close to seven years. 

“Following the increase of the CBR on June 26, 2023 from 9.5 percent to 10.5 percent, we wish to advise our customers that we shall adjust our loan interest rates to reflect a revised Access Bank Base Rate of 14.63 plus a margin, based on the customer’s credit risk with effect from August 8, 2023,” said the lender.

The changes, the bank said, will apply to all existing and new Kenya shilling-denominated facilities.

Equity Bank was the first lender to review loan prices following CBK’s adjustment of the CBR, increasing its rate from 12.5 percent to 14.69 percent effective July 10, followed by NCBA, which raised the rate to 13 percent up from 12 percent with effect from August 7. 

Other lenders are expected to follow in the trend in coming days in a shift that will set up borrowers for high cost of credit at a time when economic struggles have been entrenched by among other factors introduction of new taxation regimes that have heavily raided workers’ pay slips.

CBK data shows that borrowers hit banks with an additional Sh82.9 billion in loan defaults in just four months of the year while the share of non-performing loans hit a 16-year high.

Lenders have been shifting to a risk-based pricing regime where different consumers are charged different interest rates based on the estimated risk that the consumers will fail to pay back their loans. By KABUI MWANGI, Business Daily