The Co-operative Bank of Kenya has announced a cut in its base lending rate. The bank has announced that effective immediately, its base lending rate has been slashed from 16.5 per cent to 14.5 per cent.
The bank becomes the first tier one commercial bank in the country to reduce its lending rates by such a significant percentage in the wake of falling Central Bank benchmark rates.
“Co-op Bank is pleased to announce a significant 2 per cent reduction in our base lending rate from 16.5 per cent to 14.5 per cent per annum. This reduction takes effect immediately,” the bank announced on Monday February 10, 2025.
Following the reduction, the bank will now give loans at an interest rate that will be made up of the base lending rate of 14.5 per cent per annum and a margin of between 0 per cent and 4 per cent based on the individual borrower’s credit profile.
“This reduction in lending rates is intended to stimulate credit growth to key sectors of the economy notably the micro small and medium enterprises that are a critical engine to drive and sustain economic growth,” the bank stated.
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The reduction in the rate comes after the Central Bank of Kenya lowered its benchmark rate by 50 basis points and reduced the cash holdings to free up money for lending to customers by commercial banks.
Last week, the the Monetary Policy Committee (MPC) lowered the benchmark lending rate to 10.75 per cent from 11.25 per cent. This was the fourth cut in a row. Between December 2023 and January 2025, the CBK lending rate has fallen from 12.50 per cent to the current 10.75 per cent, reflecting a drop of 1.25 points.
The decision by the CBK to cut the cash reserve ration (CRR) last week is expected to free up to Sh. 57 billion in additional liquidity which banks can then lend to the private sector.
