Equity Bank Caps its Mobile-Based Loans at 14.5 Percent

Equity Bank, Kenya’s largest lender by customer base, will give credit at the same maximum rate of 14.5% annually to all customers including credit cards and mobile phone-based loans. The bank’s chief executive, James Mwangi, said in a statement Wednesday that the loans will be on a reducing balance basis, which is cheaper than on flat rate basis.

“Equity Bank has interpreted this [the new law] to include all credit facilities extended to customers by such institutions. This includes loans through mobile phones or through other third party platforms or collaborations with mobile network operators (MNOs), credit card facilities as well as micro finance loans,” said Mr Mwangi.

Some of the banks have argued that the mobile-based loans are not really charged interest but a transactional fee and therefore do not come under the purview of the regulated interest rates.

Mr Mwangi said that its deposits products would also attract an annual return of 7.35%. He mentioned the account that has no minimum deposit or ledger fees, school fees account, the account for investments, among others.

Equities

Market activity showed mixed signals on Wednesday as all the NSE indices closed in the red while other indicators edged up. The NSE 20 Share index lost 1.94 points to end at 3221.87 points while the NASI slashed 0.24 points to finish at 131.34 points.

The NSE 25 Share index cut 8.33 points to settle at 3447.72 points. Market capitalization fell to KES 1891.221 billion from KES 1894.664 billion yesterday whilst equity turnover heaved up 52.34% to KES 0.57 billion from KES 0.37 billion earlier due to a 77.57% rise in the volume of shares traded.

Currencies

The Kenyan shilling steadied against the US dollar on Wednesday owing to hard currency inflows from non-governmental organizations and exports of horticultural products and it is expected to remain steady in the short-term since the are no adverse macroeconomic shocks that may lead to its weakening.

The local currency added a marginal value against the Pound but fell against the Euro albeit slightly as UK inflation data published yesterday morning came under the expectation causing the Pound to fall against both the Euro and the US Dollar.