Asset-Liability Committees (ALCOs) started on Sunday discussing the fate of interest rates on their savings and loan products, in light of the Central Bank of Egypt’s (CBE) recent decision to raise basic rates by 2% in the emergency Monetary Policy Committee (MPC) meeting last Thursday.
The MPC increased the overnight deposit and lending rates to 13.25% and 14.25%, respectively, and the credit and discount rate and the main operation price to 13.75%.
In the first reaction to the MPC’s decision, interest rates on variable-return savings certificates and some loan products automatically increased.
In the Egyptian market, there are about 29 variable-return certificates issued by 24 banks, in addition to a large number of variable-return loan products.
In an attempt to support the CBE’s decisions, the National Bank of Egypt (NBE) issued three-year savings certificates, with an annual return of 17.25%, which will be disbursed annually.
ALCOs at NBE decided to increase the interest rate on the 3-year platinum certificate with a monthly return to 16% annually instead of 14%, starting today, for the new or automatically renewed certificates.
The bank issued another 3-year certificate with annual return of 16.25%, which will be disbursed quarterly, and with annual return of 16.5% in case of biannual disbursement.
Banque Misr also issued a 3-year Al Qimma certificate of deposit with an annual return of 17.25%, which will be disbursed annually. This return applies to new or automatically renewed certificates of deposit.
The bank issued another certificate of deposit with 16.25% annual return, which will be disbursed quarterly.
The certificates are available at the bank’s over 800 branches across the country, or through the BM Online application.
An official source in a private bank ruled out that private banks would rush to increase yields on their saving certificates or issue new certificates with high interest at the moment.
The source said that most banks recently issued certificates with a high return, up to 14%. Clients find it difficult to get rid of these certificates to invest in new ones since the difference between both types is not big.