Back to the complete issue
Tuesday, 22 September 2020

NBE, Banque Misr scrap high-interest savings certificates

NBE, Banque Misr scrap high-interest CDs: State-owned National Bank of Egypt (NBE) and Banque Misr have stopped offering 15% fixed-rate savings certificates launched in mid-March, the institutions told the local press (here and here). The banks started selling the high-interest certificates in March to protect savers and ease pressure on the EGP after the central bank cut interest rates by 300 bps during the early days of the covid-19 pandemic. NBE sold some EGP 280 bn worth of the product during the six-month offering, Deputy Chairman Yehia Aboul Fotouh tells Al Mal, while Banque Misr reeled in EGP 103 bn, Deputy Chairman Akef El Maghraby tells Hapi Journal.

The two banks have been pulling liquidity out of the market with high interest rate products since the float of the EGP in late 2016 as the central bank guided the market away from dollarization. Both Banque Misr and NBE are now offering products more in line with rates offered by other players in the industry, with the highest yielding CDs in the banking system now in the 12-12.25% range, according to a survey by Masrawy.

Scrapping high-interest products could be another way for the central bank to support the economy without having to cut interest rates to keep the country attractive to the carry trade. “Cancelling the 12-month, 15% high-yielding certificates of deposits … [would] be supportive of growth, equities and banks’ net interest margins,” Renaissance Capital’s Ahmed Hafez suggested in a research note last week. EFG Hermes’ Mohamed Abu Basha, meanwhile, wrote yesterday that “the move indicates that monetary authorities are comfortable with the current FX liquidity in the market with a reduced risk of dollarization,” forecasting that the CBE will leave interest rates on hold this coming Thursday.

The National Investment Bank has also scrapped its high-interest certificates as it faces the prospect of compressed net interest margins after losing access to tax breaks on income from treasuries, NIB Managing Director Mahmoud Montasser told Al Masry Al Youm. The bank will instead offer certificates yielding 10-10.75%.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.