Equity Bank Withdraws Notice to Increase Interest Rates on its Customers’ Loans
Nairobi November 16th 2015… Equity Bank Kenya Limited today announced withdrawal of a one month notice that it had issued to its customers to increase interest rates on loans effective 19th November 2015. Effectively, Equity Bank Kenya has given its’ customers reprieve of higher loan repayments that would have come with the higher interest rates on loans.
Equity Bank in its notice to all customers dated 20th October 2015 aimed at effectively aligning its interest rates to new Treasury Bills interest rates which had picked at above 22% on 15th October 2015. A week after the Treasury Bills rates increase, Equity Bank Kenya gave its customers a one month notice, which could have effectively increased interest rates on all loans effective 19th November 2015. It is this notice of loan interest rate increase that Equity Bank has revoked, meaning its’ customers will continue to pay the old interest rates on loans and maintain the existing loan repayment installments.
While releasing the Equity Group’s third quarter results recently, Equity Group CEO predicted that the high interest rates regime would be short lived and would be over by the first quarter of 2016. “We are pleasantly impressed with the speed at which the Government has been able to reduce the Treasury Bills rates” said Dr Mwangi the Group Chief Executive Officer as he addressed the media briefing. “As we anticipated, the rise in interest rates was a short-term measure but it has been shorter than we had anticipated and hence the withdrawal of interest rates increase notice,” added Dr. Mwangi.
In view of this, Dr Mwangi was confident that Equity Bank’s loan book would continue to grow and that the quality would be maintained.
The underlying macro-economic conditions did not justify high interest rates and hence the Bank’s believe that this was a temporary condition. “Inflation has remained within target, month of import cover have remained firmly above 4 months minimum requirement while current account deficit has been narrowing as a result of improving Balance of Trade,” observed Dr. Mwangi. “Now that the Government has affirmed our believe, we are confirming that we are also not increasing interests rates on loans after all. We thank the Government for the intervention and for removing the headwinds on the macroeconomic environment hence bringing stability to the financial services sector.
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