Egyptian banks raise interest rates in response to CBE move

CAIRO- 30 May 2017: The Assets and Liabilities Committee at the National Bank of Egypt (NBE) decided to raise interest rates on saving accounts 0.75 percent and on six-year deposits 1 percent, bank Chairman Yehia Aboul-Fetouh said Monday.

The interest rate on Platinum Savings Certificates at 16 percent and 20 percent have remained unchanged, Aboul-Fetouh said, adding that these certificates generated LE 300 billion in outcome since the flotation in November.

In a surprise move on May 21, the Central Bank of Egypt increased its key interest rates 200 basis points, pushing the overnight deposit rate up to 16.75 percent, the overnight lending rate to 17.75 percent, and the CBE’s main operation to 17.25 percent.

This was the first action since the CBE raised the rates by 300 basis points the same day it free-floated the pound on November 3.

Several banks responded to that action by lifting their interest rates last week. The highest percentage came at Misr Iran Development Bank, which increased rates on saving accounts 300 points to reach 15 percent, and 200 points on deposits to range between 8 percent and 12.5 percent.

The latest banking interest rate increase this week came by the Commercial International Bank on deposits by 1 percent, to span between 3.5 and 11.5 percent.

Also, the National Bank of Greece hiked its interest rates on certificates 2 percent, to reach 17 and 17.25 percent.

State-owned Banque Misr raised their interest rates last week on Corridor Products 2 percent. The Export Development Bank of Egypt has also raised their interest rates on three-year certificates by 2 percent, to record 17.75 percent, while the Ahli United Bank increased their three-year certificate rates by 2 percent.

Other banks that took the same approach were the National Bank of Kuwait (NBK), which pushed their interest rates on deposits by 1 percent and on saving accounts by 1 percent, and BLOM Bank Egypt on saving accounts by 1 percent.
Qatar National Bank (QNB) Al Ahli swelled their rates on three-year certificates by 2 percent.

Global credit rating agency Moody’s Investors Service said in a report last week that Egyptian banks will benefit from the decision, as it will boost their interest income and capital-generation capacity.