NCBA Group has announced plans to increase the cost of its loans second time in a year effective November 1, 2023.
This decision comes as borrowers face mounting challenges in servicing their credit facilities.
NCBA Group customers will see interest rates on shilling-denominated loans shoot from 13 percent to 14.5 percent.
“Due to the current macroeconomic environment and rising interest rates, we wish to advise that our base lending rate will increase to 14.5 percent for shilling-denominated loans and to 11 percent for dollar facilities effective November 8, 2023,” reads a notice from NCBA.
Similarly, the rates for dollar loans will see an increase, rising from 10.5 percent to 11 percent.
The move follows a previous increase in interest rates by the Central Bank of Kenya (CBK) four months ago when it raised rates for both dollar and shilling-denominated loans to 12 percent and 10.5 percent, respectively.
NCBA first increased its cost of loan to 13 percent from 12 percent on August 7, 2023.
Equity Bank made the first move in 2023 to adjust its loan prices – from 12.5 percent to 14.6 percent following the Central Bank of Kenya’s (CBK) revision of the benchmark lending rate.
The share of defaulted loans reached a 16-year high of 15 percent in August, causing concerns among banks lending to customers grappling with rising inflation.
NCBA Group’s Non-Performing Loans ratio dropped to 13.2 percent as of June, compared to 13.4 percent a year earlier, according to disclosures from the lender.
The group’s income from interest-bearing assets, which includes government securities, loans, and advances, experienced a significant increase, surging from Ksh.14.71 billion ($101.45 million) to Ksh.24.93 billion ($171.9 million).
NCBA’s 2022 after-tax profit hit a record Ksh.13.78 billion ($93.4 million) from Ksh.10.22 billion ($69.3 million) in 2021.