KCB Reduces Interest Rates on Savings Accounts to 7%

Customers who have been saving with Kenya Commercial Bank on the Goal Savings Account are set to earn less interest rate of 7 percent after being slashed from 8.5 percent.

This is according to a notice from the bank to its customers which disclosed that apart from the reduction on the goal savings account, customers will also be paid less than 6.3 percent interest on all the other savings accounts.

Kenya Commercial Bank (KCB) has slashed interest rates on savings accounts as Equity Bank signaled a similar move after the deposit floor was removed.

The notice comes after the Finance Act 2018 scrapped the floor that mandated lenders to pay at least 70 percent of Central Bank of Kenya (CBK) signal rate.

“We would like to inform all our esteemed customers that effective November 16 and in line with the Finance Act 2018, the interest rates paid on your savings accounts will be as follows,” read KCB’s notice.

The move comes a day after National Bank of Kenya (NBK) introduced a tiered rate that will see only customers with more than 2 million shillings earn interest above the now scrapped minimum 6.3 percent, signaling that customers may earn less on their deposits in the new regime.

CBK data shows that last year commercial banks’ interest expense dropped by 7 billion shillings despite customer deposits growing by 300 billion shillings to 2.9 trillion shillings, negating the expectation that amended banking laws could earn customers higher interests on deposits.