Citibank cuts base lending rate to spur loans uptake

The Kenyan banking arm of financial services firm Citibank has cut its base lending rate.

The bank joins other lenders that have reduced their cost of lending following the drop in Central Bank of Kenya’s (CBK) benchmark rate last month.

The ninth largest bank in the country said the cut to 19 per cent from 22 per cent beginning mid next week was a reaction to the banking regulator’s cue for lower lending rates.

“The action we have taken is in recognition of the Central Bank of Kenya’s recent action to ensure we are offering our clients a commercially competitive base rate,” said Citibank chief executive officer Dan Connelly.

The lender, which mainly focuses on corporate lending, joins other banks such as Barclays, Kenya Commercial Bank Group, Equity Bank and Diamond Trust Bank, which have announced rate cuts following the decision by the regulator to lower its benchmark rate to 16.5 per cent from 18 per cent.

READ: Kenya's Central Bank tilts the scales in favour of cheaper loans

Similar announcements

“We hope that this will help to spur economic growth in various markets through more affordable credit and that this reduction will support our customers effort to grow their business,” said Mr Connelly.

Equity, during the release of its half-year financial performance two weeks ago said it had cut its base lending rate to 20 per cent while during the same week, I&M Bank also said that it would cut its base rate to 22.5 per cent from next month.

Barclays Bank was the first to cut its base lending rate, to 21 per cent from 22.5 per cent beginning this month followed by Standard Chartered that lowered its rate by 1.5 percentage points.

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Since then others such as Commercial Bank of Africa, CFC Stanbic, Co-operative, Bank of Baroda and Prime Bank have also made similar announcements.