Introduction
In 2025, the cost of living in Kenya continues to be a major concern for households and businesses. From rising fuel prices to increased taxation, many Kenyans have turned to banks for credit facilities to bridge financial gaps. Whether it is a personal loan for education, a mortgage for a home, or a business loan to expand operations, the interest rate charged by a bank directly determines how affordable credit becomes.
The Central Bank of Kenya (CBK) plays a key role in monitoring and publishing lending rates across commercial banks in the country. This ensures transparency and helps borrowers make informed choices. According to CBK data released in May 2025, the average lending rate across all banks stood at 15.44%. However, several banks are offering loans at significantly lower rates—helping borrowers save thousands of shillings in interest payments.
In this article, we explore the top 10 banks with the lowest interest rates in Kenya, analyze their loan products, and provide practical tips to help you choose the most affordable option for your financial needs.
Understanding Bank Lending Rates in Kenya
Before diving into the top banks, it’s important to understand how lending rates are determined and why they vary from one financial institution to another.
What is a Lending Rate?
A lending rate is the percentage of interest charged by banks on loans advanced to individuals, businesses, and organizations. This rate influences the total cost of borrowing. For example, a loan of KSh 1 million borrowed at 10% will cost far less in repayment compared to the same loan borrowed at 16%.
Factors Influencing Lending Rates in Kenya
- CBK Base Rate (Monetary Policy Rate – MPR):
The CBK sets a benchmark interest rate that influences how much banks can charge. When CBK raises its rate to curb inflation, banks usually pass on the cost to borrowers. - Inflation:
High inflation increases the cost of credit as banks adjust to protect their margins. - Credit Risk:
Borrowers with poor credit histories or SMEs considered “risky” often face higher interest rates compared to large corporates. - Bank Operating Model:
International and corporate-focused banks like Citibank often charge lower rates because they have access to cheaper global funding. Smaller local banks may charge slightly higher to cover operational risks.
Lending vs Deposit Rates
- Lending Rate: Charged on loans advanced to customers.
- Deposit Rate: Interest given to savers who keep money in a bank.
While this article focuses on lending rates, borrowers must always balance the benefits against other fees and conditions.
Top 10 Banks With the Lowest Lending Rates in Kenya (2025)
According to CBK data for May 2025, these are the 10 banks with the lowest lending interest rates in Kenya.
1. Citibank N.A. Kenya – 10.36%
Citibank tops the list with the lowest lending rate in Kenya at 10.36%, far below the industry average of 15.44%. As a subsidiary of Citigroup, one of the largest financial services corporations in the world, Citibank focuses heavily on corporate and institutional clients.
- Why Citibank is Cheapest:
Citibank benefits from global capital inflows and serves high-value clients with strong repayment histories, reducing credit risks. - Loan Products:
- Corporate loans
- Trade finance
- Treasury and risk management facilities
For individuals, Citibank loans may be less accessible compared to retail-focused banks, but for corporates, it is the most cost-efficient lender in Kenya.
2. Stanbic Bank Kenya Limited – 12.84%
Stanbic, part of the Standard Bank Group of South Africa, comes second with a 12.84% lending rate.
- Strengths:
Strong presence in both retail and corporate banking.
Digital-first approach with mobile lending. - Loan Products:
- Personal loans
- Mortgage financing
- Asset financing for businesses
Stanbic appeals to both SMEs and salaried individuals, offering competitive rates and flexible repayment plans.
3. Standard Chartered Bank Kenya Limited – 13.35%
With a presence in Kenya for over 100 years, Standard Chartered is a trusted name in retail and corporate banking. Its 13.35% lending rate makes it one of the most affordable banks in 2025.
- Why It Stands Out:
- Strong customer service.
- Wide range of personal loans and mortgages.
- Reliable online and mobile banking platforms.
Borrowers looking for personal or business loans with international banking standards find Standard Chartered appealing.
4. Guardian Bank Limited – 13.57%
Guardian Bank, though relatively smaller compared to Tier 1 giants, offers competitive loans at 13.57%.
- Target Market:
Small and medium enterprises (SMEs) and middle-income earners. - Advantages:
- Quick loan processing.
- Personalized customer service.
For SMEs that may struggle to access loans from bigger banks, Guardian Bank offers a more accessible option.
5. Consolidated Bank of Kenya Limited – 13.61%
Consolidated Bank is state-owned and has been expanding its services to small businesses and individuals.
- Lending Rate: 13.61%
- Loan Types:
- Business expansion loans
- Trade finance
- Personal salary advances
As a government-owned bank, Consolidated plays an important role in supporting SMEs, making it a reliable choice for entrepreneurs.
6. Ecobank Kenya Limited – 13.72%
Part of the Pan-African Ecobank Group, Ecobank Kenya charges 13.72%, making it a competitive lender.
- Strengths:
- Regional presence across Africa.
- Focus on cross-border business financing.
This makes Ecobank attractive to importers, exporters, and businesses with pan-African trade interests.
7. Paramount Bank Limited – 14.47%
Paramount Bank may not be as well-known as Tier 1 banks, but it offers some of the most affordable rates at 14.47%.
- Loan Focus:
- Personal loans for salaried workers
- Business loans for SMEs
Paramount Bank’s smaller client base allows it to provide more personalized loan agreements.
8. Habib Bank A.G. Zurich – 14.55%
Habib Bank, an international bank headquartered in Switzerland, operates in Kenya with a focus on trade and corporate financing.
- Lending Rate: 14.55%
- Strengths:
- Strong ties with international business networks.
- Attractive for large corporations and high-net-worth individuals.
While it is not heavily retail-focused, its corporate loans remain very competitive.
9. Gulf African Bank Limited – 14.77%
As Kenya’s first fully Shariah-compliant bank, Gulf African Bank offers financing options aligned with Islamic banking principles.
- Lending Rate: 14.77%
- Unique Offering:
Instead of traditional interest, it uses profit-sharing models such as Murabaha and Ijara.
This makes Gulf African Bank attractive for customers seeking Islamic-compliant financial products while still enjoying competitive rates.
10. Equity Bank Kenya Limited – 14.89%
Equity Bank is one of Kenya’s largest and most popular banks, serving millions of customers across the country.
- Lending Rate: 14.89%
- Strengths:
- Wide branch network.
- Accessible digital banking (Equitel, Eazzy Loan).
- Loans available to individuals, SMEs, and corporates.
Despite being slightly higher than some niche banks, Equity remains a top choice due to accessibility and financial inclusivity.
Comparison With the Industry Average
According to CBK, the average lending rate in May 2025 was 15.44%. The top 10 banks listed here all fall below this average, helping borrowers save significantly.
Table: Comparison of Rates
| Bank | Lending Rate |
|---|---|
| Citibank Kenya | 10.36% |
| Stanbic Bank | 12.84% |
| Standard Chartered | 13.35% |
| Guardian Bank | 13.57% |
| Consolidated Bank | 13.61% |
| Ecobank Kenya | 13.72% |
| Paramount Bank | 14.47% |
| Habib Bank AG Zurich | 14.55% |
| Gulf African Bank | 14.77% |
| Equity Bank | 14.89% |
| Industry Average | 15.44% |
For example, a borrower taking a KSh 1 million loan at Citibank’s 10.36% rate would save nearly KSh 100,000 in annual interest compared to the industry average.
Beyond Interest Rates: What Borrowers Should Consider
While low interest is attractive, borrowers should also look at:
- Processing Fees & Hidden Charges – Some banks charge up to 4% as processing fees.
- Repayment Flexibility – Ability to restructure loans during hardship.
- Customer Service – Reliability in resolving issues.
- Accessibility – Digital platforms, mobile apps, and branch availability.
Trends in Lending Rates in Kenya (2023–2025)
Between 2023 and 2025, Kenya’s lending market has been influenced by:
- CBK Monetary Policy Adjustments – Raising base lending rates to fight inflation.
- Inflation Pressures – Driving banks to increase costs.
- Rise of Digital Loans – Mobile platforms like M-Shwari and Fuliza offering quick, but often higher-interest loans.
- Outlook for 2025–2026: Analysts expect rates to stabilize if inflation is contained, but borrowers should watch CBK policy updates.
Tips for Borrowers Seeking Low-Interest Loans in Kenya
- Maintain a Good Credit Score – Timely loan repayment improves your bargaining power.
- Compare Multiple Banks – Don’t just go with the most popular bank.
- Negotiate Loan Terms – Some banks adjust rates for loyal clients.
- Consider SACCOs & MFIs – They often offer even cheaper credit options.
- Check CBK Reports Regularly – Rates change, and the cheapest bank today may not be tomorrow.
Conclusion
Kenya’s banking sector is competitive, and in 2025, borrowers have plenty of opportunities to access loans at rates below the industry average.
- Citibank Kenya leads with the lowest rate at 10.36%.
- Stanbic and Standard Chartered follow closely, while Equity Bank rounds out the top 10 at 14.89%.
While interest rates are a critical factor, borrowers must also weigh in hidden charges, repayment flexibility, and accessibility before making a decision.
Ultimately, the best financial decision is one that balances affordability with convenience. Before committing to a loan, always check the latest CBK updates and compare multiple banks to ensure you secure the best deal.
