Deep-pocketed foreign banks beat Kenyan rivals with cheaper loan rates

Kenyan units of global banking giants are offering the country’s most competitive lending rates, using their expansive capital bases to undercut domestic rivals and capture prime borrowers in the country. 

A review by The Standard of the latest Central Bank data shows Citibank NA Kenya, part of US-based Citigroup Inc, offered loans at an average rate of 10.59 per cent in July—the lowest among 38 commercial banks in the country. 

It was closely followed by other foreign-owned lenders, Stanbic Bank Kenya, a unit of South Africa’s Standard Bank Group, at 12.30 per cent; Standard Chartered Bank Kenya at 12.81 per cent; and Ecobank Kenya at 12.87 per cent. 

The data reveals a pronounced competitive schism, with international operators leveraging parent-company balance sheets to price loans aggressively, while major home-grown banks, including listed giants Equity Group Holdings, KCB Group and NCBA Group, clustered in the mid-to-upper tier of the rate table. 

Equity Bank had an average rate of 14.92 per cent, KCB 15.66 per cent and NCBA 16.29 per cent.  

Credit Bank, one of the smaller local lenders, had the highest interest rate for the month at 19.44 per cent, according to the CBK data. 

Middle East Bank had average rate of 18.91 per cent, HF 19.03 per cent and Access Bank 19.42 per cent to round off the top four.

The release of this granular pricing data comes just weeks after the Central Bank of Kenya (CBK) enacted a landmark reform aimed at increasing transparency in the local banking sector. 

The new Risk-Based Credit Pricing Model, effective September 1, 2025, forces banks to break down their loan pricing into a transparent formula based on the Kenya Shilling Overnight Interbank Average (Kesonia) plus a risk premium (“K”), and clearly disclosed fees. 

“The multinationals have structural advantages in funding cost and scale that allow them to target high-value clients with sharp pricing,” said a banking executive with a foreign lender who sought anonymity to speak freely. 

“The new CBK rules will now make this pricing advantage starkly visible to everyone. Local banks are often serving a broader, riskier customer base, which reflects in their portfolio pricing.” 

The interest margin gap highlights the competitive dynamics in Kenya’s banking sector, where scale, funding sources, and customer segmentation drive pricing strategy.

While foreign banks focus on corporate and high-net-worth clients, local lenders maintain extensive branch networks serving retail and SME segments—often at higher risk and operational cost. 

Analysts suggest the new CBK framework, which requires monthly publication of average rates and premiums, could intensify this price competition. 

For the first time, borrowers can easily compare the true cost of credit across all institutions, potentially pressuring banks with higher premiums to justify their margins. 

“Transparency rewards efficiency and punishes inefficiency,” noted a senior economist at a local investment bank. 

“Banks with high operating costs or inferior risk models can no longer hide behind opaque pricing. This data is a first glimpse into that new, more competitive reality.”