KCB cuts rates on savings after deposit floor scrap

Customers at a Kenya Commercial Bank branch in Nairobi. FILE PHOTO | NMG

What you need to know:

  • KCB will be paying customers an interest of seven percent per annum on KCB goal savings account, down from 8.5 percent that it has been offering since launching the account in June last year.
  • Other savings accounts will also pay customers less than 6.3 per cent interest.
  • The move comes a day after NBK introduced a tiered rate that will see only customers with more than Sh2 million earn interest above the now scrapped minimum 6.3 per cent.

Kenya Commercial Bank (KCB) has slashed interest rates on savings accounts as Equity Bank signalled a similar move after the deposit floor was removed.

KCB put up a notice on Tuesday showing that it will now be paying customers an interest of seven percent per annum on KCB goal savings account, down from 8.5 percent that it has been offering since launching the account in June last year.

Other savings accounts will also pay customers less than 6.3 per cent interest.

The notice comes after the Finance Act 2018 scrapped the floor that mandated lenders to pay at least 70 percent of Central Bank of Kenya (CBK) signal rate.

“We would like to inform all our esteemed customers that effective November 16 and in line with the Finance Act 2018, the interest rates paid on your savings accounts will be as follows,” read KCB’s notice announcing the cut.

The move comes a day after National Bank of Kenya (NBK) introduced a tiered rate that will see only customers with more than Sh2 million earn interest above the now scrapped minimum 6.3 per cent, signalling that customers may earn less on their deposits in the new regime.

CBK data shows that last year commercial banks’ interest expense dropped by Sh7 billion despite customer deposits growing by Sh300 billion to Sh2.9 trillion, negating the expectation that amended banking laws could earn customers higher interests on deposits.

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