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Here are the Top Most Expensive Lenders in Kenya

BY Soko Directory Team · February 1, 2019 08:02 am

The Kenyan banking sector continues to evolve with each passing day. From the time people spent hours in banking halls to now where people can transact almost everything via a mobile phone.

Currently, Kenya has a total of 43 commercial banks serving a population estimated to be approximately 52 million. 9 more foreign banks have shown the interest in setting up shop in Kenya which will make it 52 commercial banks.

One of the major services that Kenyans have been seeking from the majority of commercial banks is loans. However, with the introduction of the interest capping cap, most banks refrained from the issuance of loans to their customers.

Most Kenyans turned to mobile loan apps to secure loans, most of which have been termed to have high-interest rates. Despite the capping of interest rates, some banks are still charging high rates on loans.

Equity Bank has been ranked as the country’s most expensive bank by the Kenya Bankers Association and Central Bank of Kenya through the cost of the credit portal.

Despite its high pricing, Equity Bank has remained Kenya’s largest retail lender by customers even with the stiff competition from other large and smaller banks.

It has been revealed that anyone taking a one-year unsecured personal loan of one million shillings will cost a total of 131,807 shillings including charges and interest.

Barclays Bank of Kenya came in second as the most expensive Bank with a total cost of credit of 118,127 shillings for a similar loan.

Family Bank was third with charges and interest of 112,807 shillings followed by Standard Chartered Bank (Kenya) and Bank of Africa whose total cost of credit standing at 112,207 shillings and 110,807 shillings respectively.

Interest on all bank loans is currently capped at 13 percent 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 charge pure interest of 71,807 shillings 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 a demonstration of their stronghold 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.

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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