Equity Bank, CFC lead the way in cutting cost of loans
http://www.businessdailyafrica....84/-/y9xpkb/-/index.htmlEquity Bank, Kenya’s biggest lender by customer numbers, reduced its effective cost of loans by five percentage points to 20 per cent while CFC Stanbic Bank cut its base lending rate to 16 per cent from 17 per cent.
Effective lending rates are ordinarily higher than base rates because they reflect the true cost of loans which includes a premium that is set depending on a customer’s repayment risk profile.
“We have reduced our base lending rate from 19 per cent to 17 per cent consequently the effective interest rate on your facility will be as follows; current effective interest rate 25 per cent; new effective interest rate 20 per cent starting from May 1.” read part of a letter sent to an Equity Bank customer.
The Equity Bank letter seen by the Business Daily indicates the lender has reduced its interest rates depending on the type and amount of loan. Those servicing development loans are the biggest beneficiaries with a seven percentage points reduction.
The effective cost of development loans is 18 per cent from 25 per cent and business loans over Sh10 million is 18 per cent and those below will cost 20 per cent.