NCBA Bank Kenya, the banking unit of the NCBA Group, a leading financial services conglomerate controlled by some of Kenya’s wealthiest families, hiked lending rates despite borrowers grappling with economic uncertainties.
The move follows the Central Bank of Kenya’s (CBK) adjustment of its benchmark rate to 13 percent from 12.5 percent during its February MPC meeting to combat inflation and support the Kenyan shilling.
NCBA hikes lending rates on shilling, dollar loans: What it means for borrowers
In a Monday notice, the bank announced a rise in its base lending rate for Kenyan shilling loans to 17.5 percent from 16.5 percent. Dollar-denominated loans will also see an increase to 11.75 percent from 11 percent. Borrowers with variable-rate loans will face higher repayments starting May 21.
NCBA Bank Kenya justified the increase, citing the need to align with prevailing market conditions. “In view of the ongoing macroeconomic changes, NCBA Bank Kenya’s base lending rates will increase…,” the bank said in a statement.
The adjustment will impact loans pegged to the base rate, with shilling loans rising by 1 percent and dollar loans by 0.75 percent, effective May 21, 2024. New loan facilities will adopt the revised rates immediately, while fixed-rate loans remain unaffected, offering some stability for borrowers seeking protection from interest rate fluctuations.
Strong profit, eyes regional growth
Headquartered in Nairobi, NCBA Group, a non-operating holding company, boasts a vast subsidiary network across Africa, including Tanzania, Rwanda, Uganda, and Côte d’Ivoire.
Formed in 2019 through the merger of NIC Bank Group and Commercial Bank of Africa Group, NCBA Group has become a major player in East Africa’s financial sector. Partially owned by prominent Kenyan families like the Kenyattas, Meralis, and Ndegwas, the conglomerate is committed to strengthening its Kenyan operations while expanding regionally.
The group reported strong financials in 2023, with a profit of Ksh21.46 billion ($162.7 million), up from Ksh13.78 billion ($104.47 million) in 2022. This growth underscores NCBA Group’s dedication to fostering regional economic development and supporting key sectors across Africa’s diverse markets.
