The Central Bank of Kenya (CBK) has released its latest data on average lending and deposit rates across commercial banks for March 2026, offering a snapshot of borrowing costs in the market.
According to a notice issued on May 5, lending rates ranged between 10.80 percent and 18.57 percent, while deposit rates fell between 3.12 percent and 11.39 percent.
The figures reveal notable differences in the cost of credit among banks. Citibank N.A Kenya stands out as one of the most affordable lenders, with an average lending rate of 10.80 percent. It is followed by Stanbic Bank Kenya Limited at 11.75 percent, Habib Bank A.G Zurich at 12.36 percent, and Standard Chartered Bank Kenya Limited at 12.87 percent.
At the opposite end of the spectrum, Credit Bank PLC tops the list of the most expensive lenders at 18.57 percent, closely followed by Bank of Africa Kenya Limited at 18.41 percent. Other high-cost lenders include Kingdom Bank Limited, Spire Bank Limited, and Family Bank Limited, all posting significantly elevated rates.
On average, lending rates across the sector stood at 14.70 percent, while deposit rates averaged 6.86 percent, reflecting a wide spread between borrowing and saving returns.
How lending rates are determined
Under the CBK’s revised Risk-Based Credit Pricing Model introduced in August 2025, banks now calculate lending rates using a structured formula rather than arbitrary base rates.
At the core of this system is KESONIA, the Kenya Shilling Overnight Interbank Average Rate, which reflects the prevailing market cost of funds and typically sits between 11 and 13 percent in 2026. Banks then add a margin, usually between 3 and 8 percent, to cover operational costs, profit, and borrower-specific risks such as creditworthiness and repayment capacity.
Additional charges, including processing fees, insurance, and legal costs, are also factored in, though these are subject to regulatory oversight.
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As a result, loan pricing varies significantly depending on a borrower’s profile. Customers with strong credit histories and adequate collateral tend to secure lower rates, while riskier borrowers often face higher costs, in some cases exceeding 20 percent.
Policy outlook
The CBK has maintained the Central Bank Rate at 8.75 percent following its latest Monetary Policy Committee meeting in April 2026, signalling a steady policy stance in the near term.
The next review is scheduled for June 2026, in line with the regulator’s bi-monthly policy cycle.
