This archive report was first published on 6 November 2019.
On November 5, 2019, Kenya Commercial Bank (KCB) Group CEO Joshua Oigara addressed concerns that banks would increase interest rates on loans after Parliament's decision to remove the cap on interest rates.
While supporting the decision, Oigara stated that Kenyans should not expect a sudden increase in interest rates, as speculation of rates reaching 20% is unfounded.
“The macroeconomic and business environment does not support high rates,” Oigara said in a press statement.
He emphasized that allowing banks to price risk is crucial and that the industry has learned valuable lessons over the past two years.
“We are in a new equilibrium. Banks have adapted a new business model. We lend to current customers at 13% because we have accepted their risk profile. This will not change overnight,” Oigara explained.
He further stated that the fear of a massive repricing is not based on the truth and that banks are ready to lend, especially to Small and Medium Enterprises (SMEs), whose risk profile is perceived to be higher.
“We may see a 2-3% increase for customers with high-risk profiles, but we do not see an opportunity to return to high rates,” Oigara added.
