NCBA Group, a financial services conglomerate that boasts some of Kenya’s wealthiest families as its shareholders, has become the second Kenyan lender to raise interest rates on its loans following the recent adjustment of the benchmark rate by the Central Bank of Kenya (CBK).
This marks the second time NCBA has modified its interest rates in three months. On May 29, the bank increased lending rates for dollar and shilling-denominated loans to 12 percent and 10.5 percent, respectively.
The decision by NCBA closely follows the recent trend set by the CBK, which raised the bank rate from 9.5 percent to 10.5 percent, reaching its highest level in nearly seven years. Equity Group was the first to respond to this change by adjusting its lending rates.
However, the increase in loan prices could dampen the interest of Kenyans in securing loans as the cost of borrowing becomes more expensive.
This could consequently lead to lower interest earnings for Kenyan banks, including NCBA Group. Notably, NCBA Group experienced a significant surge in its earnings at the end of the 2022 fiscal year.
As a non-operating holding company, NCBA Group operates an extensive network of subsidiaries across various African nations, including Tanzania, Rwanda, Uganda, and Côte d’Ivoire.
The financial services conglomerate was formed in 2019 through the merger of NIC Bank Group and Commercial Bank of Africa Group. With 109 branches in five countries, NCBA Group is partially owned by some of Kenya’s wealthiest families, including the Kenyatta, Merali, and Ndegwa families.
As NCBA Group adjusts its loan prices to accommodate the new benchmark rate, the impact on Kenyans seeking loans remains uncertain. Nevertheless, the bank continues to solidify its position as a leading player in the Kenyan and African financial landscape.
At the end of its 2022 fiscal year, NCBA posted a 34.7-percent increase in its profit from Ksh10.22 billion ($77.25 million) in 2021 to Ksh13.78 billion ($104.1 million) in 2022, thanks to sustained growth in its interest and non-interest income during the review period.
The group’s loan book in the Kenyan market stood at Ksh249.8 billion ($1.77 billion) in the financial year ended December, indicating a 13.5 percent increase from the previous year’s figure of Ksh220 billion ($1.56 billion).
