Private banks in Egypt issue high-yield savings certificates

Hossam Mounir
4 Min Read

Private banks have taken measures to protect their deposits by issuing high-yield savings certificates, stepping into the shoes of the National Bank of Egypt (NBE) and Banque Misr.

The NBE and Banque Misr announced last Sunday the launch of two new savings certificates, the first for 3 years with a fixed return of 19% annually, to be paid monthly, and the second certificate for 3 years, with a decreasing interest rate; 22% for the first year, 18% for the second year, and 16% for the third year.

The two banks said in a statement that offering these two certificates reflects the positive vision of lower interest rates during the coming period, with the expected gradual decline in inflation rates, with the stability of markets in light of international and domestic changes and the Central Bank of Egypt’s policy to target inflation.

According to the two banks, these certificates collected EGP 67bn on the first day of their issuance.

In the first reaction to offering these certificates, the Commercial International Bank issued a certificate for a period of 3 years, with a return of 22%, to be paid monthly.

According to data published by the bank on its website, the minimum purchase amount for the certificate is EGP 3ms and multiples of EGP 1,000.

The bank offers other certificates with a return ranging from 16% to 18%, with a minimum of EGP 10,000 for purchase and up to EGP 1m.

QNB Alahli also raised the interest rates on its three-year savings certificates with a fixed return, to 19% to be paid monthly, 19.10% to be spent quarterly, and 19.25% to be spent annually, with a minimum of EGP 500,000 for the first issuance of the certificate and multiples of EGP 1,000.

The bank also raised the interest on the various savings accounts it offers to reach 14.50% annually.

QNB Alahli provides a number of different savings accounts, which are represented in the daily savings account in the local currency, which calculates daily interest added monthly to the account, the Plus savings account, the super savings account, and the minors’ savings account.

The Assets and Liabilities Committees (ALICO), which are responsible for determining interest levels in banks, continue to hold their meetings since the beginning of this week to discuss adjusting the interest rates on their savings and loan products, after the Central Bank’s decision today to raise interest rates by 2% at once.

The Monetary Policy Committee of the Central Bank had decided last Thursday to raise the basic return rates at the Central Bank by 2% to reach 18.25% for deposits, 19.25% for lending, and 18.75% for the credit and discount rate and the price of the main operation at the Central Bank.

The Central Bank’s decision was widely expected after the jump in the inflation rate at the end of last February.

In a direct reaction to the Central Bank’s decision, interest rates on variable-return certificates and some loan products were automatically priced at the Central Bank’s basic interest rates.

There are about 29 variable-return certificates issued by 24 banks in the Egyptian market, in addition to a large number of variable-return loan products.

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