Equity Bank Reduces Lending Rates, Boosting Kenyan Economy

Equity Bank (K) Ltd. has announced a reduction in interest rates on all new and existing Kenya Shilling-denominated credit facilities, effective November 18, 2024. This move follows the Central Bank of Kenya’s (CBK) Monetary Policy Committee (MPC) decision to lower the Central Bank Rate (CBR) from 12.75% to 12.0%. This marks the second interest rate reduction by Equity Bank within six months, demonstrating their commitment to making credit more affordable and accessible.

The new interest rate structure will consist of a revised Equity Bank Reference Rate (EBRR) of 17.39% plus a margin, capped at a maximum of 8.5% per annum. This reduction applies across a broad spectrum of credit products, benefiting a diverse customer base and promoting financial inclusion.

Benefits for Businesses and Households:

The reduced lending rates are expected to have a significant positive impact on the Kenyan economy.

• For Businesses: Lower borrowing costs will reduce operational expenses, enabling businesses to access more affordable credit. This financial relief will stimulate business activity, foster growth, and contribute to job creation.
• For Households: Reduced borrowing costs will translate to increased disposable income for families. This additional income can boost consumer spending, further stimulating economic activity.

This initiative aligns with the government’s efforts to strengthen the national economy by making financing more accessible and sustainable for both businesses and individuals.

Equity Bank’s Response to Economic Indicators:

The MPC’s decision to lower the CBR was influenced by several positive economic factors, including an improved global economic outlook, easing inflation in advanced economies, and a stable domestic environment with controlled food and fuel prices. Equity Bank’s proactive rate adjustment reflects its commitment to aligning with these policy goals and ensuring customers directly benefit from the improving economic climate.

Strong Financial Position Enables Lending Rate Reduction:

Equity Group’s recent financial results for Q3 2024 demonstrate the bank’s strong financial position, which enables them to implement these rate reductions. Key highlights include:

• 9% Year-on-Year Growth in Deposits: Reaching KShs. 1.3 trillion.
• Customer Base of 21.3 Million: Demonstrating the bank’s extensive reach.
• 12% Increase in Cash and Cash Equivalents: Reaching KShs. 295.5 billion.
• 5% Growth in Investment Securities: Reaching KShs. 468.1 billion, resulting in a strong liquidity position of 55%.
• Strong Capital Buffers: With a core capital ratio of 15.9% and a total capital ratio of 18.3%, exceeding regulatory requirements.
• 17% Growth in Shareholders’ Funds: Reaching KShs. 227.0 billion, strengthening the Group’s ability to support businesses and households.

These strong financial indicators reinforce Equity Bank’s capacity to support businesses and households, aligning with its private sector-led Africa Resilience and Recovery Plan (ARRP).

Commitment to Inclusive Economic Development:

Equity Bank’s decision to reduce lending rates reflects its ongoing commitment to supporting customers’ financial goals and promoting inclusive economic development in Kenya. By passing on the benefits of the reduced CBR, Equity Bank aims to create a more favorable environment for business expansion, job creation, and community prosperity. This initiative underscores the bank’s mission to transform lives, provide dignity, and expand opportunities for wealth creation across Kenya. The bank’s commitment to making credit more affordable and accessible is a significant step towards supporting economic recovery and fostering a more robust and inclusive financial system.