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Equity Bank ranked the most expensive lender

Customers queue at an Equity Bank ATM in Nairobi.
Customers queue at an Equity ATM in Nairobi. PHOTO/FILE 

Equity Bank, #ticker:EQTY Kenya’s largest retail lender by customers, has been ranked the country’s most expensive bank.

This indicates the Nairobi Securities Exchange-listed firm’s huge pricing power despite competition from large and small rivals.

Taking a Sh1 million, one-year unsecured personal loan from Equity now costs a total of Sh131,807, including charges and interest.

This is according to www.costofcredit.co.ke, a portal that was created by the Kenya Bankers Association (KBA) and the Central bank of Kenya to boost transparency of loan pricing.

Barclays Bank of Kenya is ranked second most expensive with a total cost of credit of Sh118,127 for a similar loan.

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Family Bank is third with charges and interest of Sh112,807 followed by Standard Chartered Bank (Kenya) and Bank of Africa whose total cost of credit stand at Sh112,207 and Sh110,807 respectively.

Interest on bank loans

Interest on all bank loans is currently capped at 13 per cent per annum but the total cost of credit varies depending on additional charges.

The data shows that most small and medium-sized banks such as HF Group, Consolidated and Guaranty Trust Bank have little to no charges, making their loans the cheapest.

HF and Sidian Bank, for instance, charge pure interest of Sh71,807 each on a similar credit facility, almost half of what some of their competitors charge.

Big banks, which have the capacity to undercut their smaller rivals because of their larger economies of scale, have nonetheless continued to load the highest charges on their loans.

This is seen as demonstration of their strong hold on customers through a mix of factors, including branding, wider networks and value addition.

High customer numbers and fees for services have helped the big banks to overcome thinner lending margins brought by the interest rate caps.

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