New data from the Kenya Bankers Association (KBA) cost-of-credit portal has revealed striking disparities in the total cost of borrowing among Kenyan banks, with Habib Bank AG Zurich ranking as the cheapest lender for a Sh100,000 personal loan over 12 months, while Sidian Bank emerged as the most expensive. The analysis highlights how bank fees and third-party charges — not just interest rates — significantly influence what borrowers ultimately pay.
According to the KBA portal, a borrower taking a Sh100,000 one-year loan from Habib Bank AG Zurich would repay Sh112,750, reflecting an annual rate of 12.75 percent with no additional fees. By contrast, Sidian Bank would require the same borrower to repay Sh131,100 — a figure that includes Sh16,220 in interest (16.22 percent), Sh12,400 in bank charges, and Sh2,480 in third-party costs. This means a borrower would pay more than Sh18,000 extra at Sidian compared to Habib for the same facility. Guardian and Access Bank Kenya followed closely as the second and third most expensive lenders.
Interestingly, Middle East Bank’s total cost stood at Sh23,980 despite a headline rate of 23.98 percent, since it does not charge any additional fees. The findings emphasize how non-interest charges can weigh more heavily on borrowers than interest rates themselves. KBA’s analysis covered 33 banks offering one-year, Sh100,000 personal loans, with lenders currently applying identical rates for both secured and unsecured facilities.
KBA’s Head of Research, Samuel Tiriongo, said all banks are set to implement a new risk-based pricing model tied to the Kenya Shilling Overnight Interbank Average (Kesonia) by the end of the month. The framework, approved by individual bank boards, will see lenders publish average premiums per product. Transition begins in December for new loans, with older loan portfolios expected to align by February 2026.
Meanwhile, the Central Bank of Kenya (CBK) has reduced the policy rate eight times since August 2024 — from 13 percent to 9.25 percent — in a bid to stimulate lending. Private-sector credit growth rose modestly to five percent by the end of September as average lending rates eased to 15.1 percent. CBK Governor Kamau Thugge noted that with the upcoming Kesonia-based models, “once we lower the benchmark rate, banks should also lower their rates.”
The data underscores a shifting lending landscape in which transparency on total loan costs — rather than interest alone — will become crucial for borrowers seeking fairer and more competitive credit terms.
