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Windfall for depositors as interest rates hit 24-year high
Faced with increased competition from alternative instruments including Treasury bills –whose interest rates top 16 percent— banks raised the interest paid on fixed deposit accounts by 67.2 percent from Sh37.48 billion in the same quarter last year.
Cash-rich firms and individuals earned Sh62.7 billion in the first quarter to March as returns on deposits hit 24-year high amid cut-throat competition by lenders to cling onto high value deposits in the wake of capital flight by investors from the country.
The Central Bank of Kenya (CBK) data shows that the commercial banks average deposit rate - the yield on fixed deposit accounts - hit 10.1 percent in December 2023, as lenders raced to avoid losing out deposits from investors chasing higher returns.
