Equity Bank Adjusts Loan Prices Using New Model

Equity Bank, the largest subsidiary of Equity Group Holdings, has announced its transition to the new loan pricing framework or the Revised Risk Based Credit Pricing Model.

The lender said the new Risk-Based Credit Pricing Framework will now affect all new local currency variable rate loans, effective 1^st December 2025.

Equity Bank Notice

In a notice to customers, Equity Bank also disclosed that all existing local currency variable-rate loans shall transition to the new pricing framework by 28^th February 2026.

Equity Bank now joins KCB as more banks prepare to onboard the new loan pricing tool that introduced by the Central Bank of Kenya (CBK) through a circular to all licensed banks, dated 25th August 2025.

Key features of the New Pricing Framework include one that all new variable-rate loan facilities will be priced based of the Central Bank Rate (CBR) plus K, where K represents a customer-specific risk-based premium. The premium incorporates customer credit risk, shareholders’ return, costs associated with lending and other relevant costs

The common reference rate shall be the Central Bank Rate (CBR) as determined and published from time to time by the Monetary Policy Committee (MPC) of the Central Bank of Kenya.

Equity Bank has informed its customers that facilities that will not be affected by the new loan pricing tool includes foreign currency loan facilities, flat-rate loan facilities and fixed-rate loan facilities

Equity customers whose facilities are scheduled for transition will be notified at least 30 days in advance, in line with regulatory requirements.

Equity joins KCB and Absa Bank, lenders that have already announced the transition roadmaps to the new loan pricing model.

Banks have been on a transition phase, which ran from September 1 to November 30, 2025, during which lenders have been reviewing and updating their loan pricing models, and seeking approvals from their respective Boards of Directors.

Those that have already received nods from their respective boards, have begun issuing new variable-rate loans using the Kenya Shilling Overnight Interbank Average(KESONIA) as the base rate.

All existing variable-rate loans will migrate to the revised framework by February 28, 2026.

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