A number of bankers expected banks in Egypt to raise returns on savings certificates in the current period after Banque Misr has already raised interest rates on its local-currency distinct savings certificate from 11.5% to 12.5% and Commercial International Bank (CIB) raised returns on its 3-year savings certificate from 10.5% to 11%.
Bankers revealed that both Banque Misr and CIB acquire about EGP 242 million of the savings certificates market in Egypt. Bankers differed on the reasons behind raising returns on savings certificates considering that this move will affect the returns on government debt instruments.
Fatima El-Ebrashy, head of banking activity development unit at Arab Banking Corporation (ABC), affirmed that there is no local currency shortage at banks, noting that returns on savings certificates are determined according to the bank’s strategy and its needs for liquidity.
El-Ebrashy expected other banks to take such move in the upcoming period so as to be able to compete with the banks which initiated such move. She added that the returns offered by banks in the meantime are suitable to the market conditions, noting that the Central Bank of Egypt’s Monetary Policy Committee has left interest rates unchanged in its last meeting.
Walid Nagy, Director of retail products and sales unit at the National Bank of Egypt (NBE), ruled out that the Egyptian banking sector faces local currency shortage, affirming that the decision of raising returns on savings certificates is taken by the monetary policy committee of the bank according to its need for liquidity.
Amr Tantawy, head of retail banking sector at Misr Iran Development Bank, expected that raising returns on local-currency savings certificates will encourage customers to invest in local-currency denominated instruments especially amid the current dollar liquidity shortage.
The main reason behind raising interest rates is the bank’s need for liquidity which is determined according to the volume the lender intended to offer for customers, he noted.
Tantawy expected other banks to raise returns on savings certificates in the upcoming period in order to attract customers amid the fierce competition in the banking industry.
