StanChart, I&M Ranked The Most Expensive Lenders

By Jane Muia / Published August 1, 2022 | 4:15 pm

KEY POINTS

At StanChart, 1 million shillings loans for a similar period attract a cost of 117,745 shillings inclusive of interest on the debt and other internal and external charges such as bank fees, legal fees, insurance, and government levies.

KEY TAKEAWAYS

The bottom value of credit score is on the Absa Bank at 76,147 shillings. Diamond Trust Bank (DTB) and the Kenya Commercial Bank (KCB) charge between 95,807 shillings and 107,207 shillings respectively.

I&M bank and Standard Chartered have been ranked the most expensive Banks to borrow from. For instance, a borrower borrowing 1 million shillings personal loan at I&M bank for one year will pay a credit cost of 127,140 shillings.

Equity and cooperative banks follow in the list produced by the Kenya Bankers Association (KBA), and the Central Bank of Kenya (CBK), with a credit cost of 114,057 shillings and 111,929 shillings respectively.

The credit cost list was made in line with the CBK guideline which requires commercial banks to publish information on all the charges and tariffs on services, personal loans, and mortgages on a common web platform (www.costofcredit.co.ke) which was set up in 2017 to enable borrowers to choose lenders.

This came as a relief to many borrowers who were paralyzed by extra charges loaded by the banks on loans.

Interest-wise, I&M, and StanChart take a lead at 14.3 percent and 14 percent respectively, followed by Absa bank (13.77 percent), and Stanbic bank (13.65 percent). KCB, Equity, NCBA, and DTB charge interest at 13 percent.

I&M presented the highest non-interest cost at 48,000 shillings while the lowest charges were at DTB at 24,000 shillings.

So far, only Equity Group has disclosed the approval of its risk-based pricing model which will see future loans priced at between 13 and 18.5 percent depending on each borrower’s risk profile. Other top-tier banks including Absa, Stanbic, and KCB have been in negotiation with the regulator to get approval on loan pricing.

The approval is expected to channel more credit to the medium and small-sized enterprises (MSMEs)