Commercial banks in Kenya are reducing their lending rates, following recent moves by the Central Bank of Kenya (CBK) to ease its monetary policy in an effort to boost private sector lending and economic activity. Data from the CBK for May 2025 shows a continued downward trend in bank interest rates across the country, with the industry’s average lending rate now standing at 15.44 percent.
Among the banks offering the lowest interest rates are Citibank N.A Kenya at 10.36 percent, Stanbic Bank at 12.84 percent, Standard Chartered Bank at 13.35 percent, Guardian Bank at 13.57 percent, and Consolidated Bank at 13.61 percent. These institutions have emerged as the most affordable lenders in Kenya’s commercial banking sector, offering relatively cheaper credit to consumers and businesses.
On the other side, five banks reported the highest lending rates, led by Commercial International Bank (CIB) Kenya at 20 percent, followed by Access Bank at 19.98 percent, Middle East Bank at 19.87 percent, Credit Bank at 19.41 percent, and HFC Limited at 18.99 percent. The wide spread between the lowest and highest lending rates reflects differences in risk appetite, operational costs, and target customer segments across the banking sector.
The CBK data shows that most banks either maintained or slightly reduced their interest rates in May 2025 compared to the previous month. For instance, African Banking Corporation (ABC) kept its rate at 17.31 percent in both April and May, having earlier reduced it from 17.54 percent in March.
However, not all banks reduced their rates. Ten lenders, including Consolidated Bank, Co-operative Bank and its subsidiary Kingdom Bank, Access Bank and its subsidiary National Bank, and Victoria Commercial Bank, slightly increased their lending rates between April and May.
Meanwhile, deposit rates have also declined, with the industry average falling from 10.45 percent in December 2024 to 8.70 percent in May 2025. Despite the drop, some banks continue to offer higher returns to savers. Credit Bank leads with a deposit rate of 12.68 percent, closely followed by African Banking Corporation at 12.63 percent. Family Bank also made headlines after nearly doubling its deposit rate from 6.39 percent in April to 11.64 percent in May, in a bid to attract more deposits.
The CBK has been actively lowering its benchmark lending rate, the Central Bank Rate (CBR), to encourage credit growth. The rate was reduced to 9.75 percent on June 10, 2025, down from 10.00 percent in April and a previous high of 13.00 percent. According to CBK Governor Kamau Thugge, the Monetary Policy Committee saw room for further monetary easing to support increased lending to the private sector and stimulate economic activity, while also ensuring inflation and exchange rate expectations remain stable.
Kenya’s inflation has continued to trend downward, hitting 3.8 percent in May 2025, down from 4.1 percent in April. This rate is below the midpoint of the government’s inflation target range of 5 percent plus or minus 2.5 percent. The CBK has attributed the moderation in inflation to improved food and energy prices and stability in the Kenyan shilling exchange rate.
Analysts believe the current trend in interest rates will continue in the short term, especially as the CBK maintains its accommodative stance and inflation remains subdued. Lower borrowing costs are expected to benefit businesses and households, particularly small and medium-sized enterprises (SMEs) which have often cited high lending rates as a barrier to growth.
As interest rates decline, competition among commercial banks is expected to intensify, pushing institutions to find new ways to retain customers while balancing profitability. Banks may turn to digital innovations, alternative credit scoring models, and product diversification to grow market share in a highly competitive environment.
Despite the positive outlook, stakeholders warn that lending institutions must remain vigilant, particularly in assessing credit risks and ensuring adequate capital buffers to avoid future shocks.
