The CBK has made significant moves to ease monetary policy to spur economic recovery and has lowered the benchmark lending rate since Q4 2024. This is to encourage private sector credit growth which is key to Kenya’s overall economic recovery.
In June 2025, the CBK lowered the base lending rate by 25 basis points to 9.75% after the MPC meeting. This is part of a broader plan to make borrowing cheaper for businesses and individuals.
Lending Rates in June 2025: A Closer Look
After the CBK’s decision to lower the benchmark rate, the average lending rates among commercial banks have been on a steady decline. From 16.64% in January 2025, average interest rates dropped to 15.29% by June 2025, reflecting a more favorable environment for borrowers. However, lending rates still vary across banks, and some institutions offer lower rates compared to others.
Here’s a breakdown of the average interest rates from the lowest to the highest for June 2025:
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Citibank N.A Kenya: 10.41%
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Stanbic Bank Kenya: 12.42%
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Ecobank Kenya: 12.90%
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Standard Chartered Bank: 13.08%
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Guardian Bank: 13.54%
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Consolidated Bank Kenya: 13.80%
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Paramount Bank: 14.37%
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Habib Bank A.G Zurich: 14.61%
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Gulf African Bank: 14.70%
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Equity Bank Kenya: 14.84%
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Bank of India: 15.98%
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Premier Bank Kenya: 15.00%
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Bank of Baroda Kenya: 15.09%
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Diamond Trust Bank Kenya: 15.15%
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ABSA Bank Kenya: 15.29%
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NCBA Bank Kenya: 15.41%
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Prime Bank: 15.44%
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Victoria Commercial Bank: 15.64%
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KCB Bank Kenya: 15.69%
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Guaranty Trust Bank: 15.74%
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Kingdom Bank: 15.75%
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National Bank of Kenya: 15.82%
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Family Bank: 16.00%
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Co-operative Bank of Kenya: 16.09%
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M-Orient Bank: 16.19%
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African Banking Corporation: 16.42%
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UBA Kenya Bank: 16.44%
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I&M Bank: 16.55%
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Development Bank of Kenya: 16.59%
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DIB Bank Kenya: 16.60%
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Sidian Bank: 17.52%
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SBM Bank Kenya: 18.00%
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Bank of Africa Kenya: 18.21%
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Middle East Bank Kenya: 18.65%
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HFC Limited: 19.01%
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Commercial International Bank Kenya: 19.43%
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Credit Bank: 19.43%
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Access Bank Kenya: 19.97%
Why Are Interest Rates Still High?
Despite the CBK rate cut, many Kenyan borrowers are still facing relatively high loan interest rates. Samuel Tiriongo, Director of Research and Policy at the KBA said lending rates are influenced by factors such as each bank’s base rate, the market environment and most importantly the credit risk profile of the borrower.
The CBK’s lower base rate has led to a drop in overall interest rates but credit risk remains a big factor. This is especially true as NPLs have risen to 17.2% in early 2025. With such high levels of bad debts, banks are being cautious in lending and that’s why interest rates are still high.
What Does This Mean for Kenyan Borrowers?
If you’re planning to take a loan, know that although the base lending rate is lower, banks are still assessing risk heavily. Borrowers with good credit history will get better rates while those with higher risk will get higher rates.
Also NPLs are still a concern for banks and that means higher interest rates for all customers as lenders try to cushion against loan defaults.
Key Takeaways
The CBK has lowered the benchmark lending rate to 9.75% to spur credit growth and support Kenya’s economic recovery.
Commercial banks’ interest rates have gone down from 16.64% in January 2025 to 15.29% in June 2025.
But high interest rates persist due to high credit risk and rising NPLs in the industry.
Borrowers with good credit can negotiate better terms but be cautious as loan defaults are still affecting lending.
What’s Next for Kenyan Interest Rates?
As the economy recovers and the industry adjusts to the new policy changes, we may see further rate cuts in the future. But the pace of these rate cuts will depend on how fast credit risk improves and how well the industry manages NPLs.
For now, Kenyan borrowers should watch out for how the CBK’s monetary policy evolves and how commercial banks adjust their rates.