Savers line up for high yield CDs: Savers have put away some EGP 11 bn into the newly introduced high-yield certificates of deposit (CDs) during their first 24 hours of issuance on Friday, Banque Misr Chairman Mohamed El Etreby told Kelma Akhira’s Lamees El Hadidi (watch, runtime: 15:59) on Saturday. Savers have poured some EGP 4 bn in CDs with Banque Misr and EGP 7 bn with the National Bank of Egypt’s (NBE) on the first day, El Etreby said.

BACKGROUND: The nation’s two largest banks introduced the record-high yield CDs with yields up to 27% over the weekend, allowing clients to buy the certificates online to be activated when banks go back to work today. The issuance came after CDs worth around EGP 500 bn introduced by the two banks in January 2023 began maturing this past Friday.

Buyers have two types of CDs to choose from: Saver can opt for the certificate with aone-time payment of 27% when their CDs mature in 12 months' time or the certificate with monthly interest payouts at a reduced 23.5% annualized rate. More details on the banks’ Facebook pages (here and here).

Sound smart: It remains unclear whether consumers lined up for the new CDs in the same way that they did the last time around. Customers brought up some EGP91bn worth of high-yield CDs in the first three days of them being brought to the market in January 2023. Given the CDs were offered first over the weekend and through online channels, we’ll have to wait until at least until after banks re-open today post-Christmas to have a better idea of how popular the CDs are.

El Etreby has big ambitions: “I expect savers to invest more than EGP 500bn in this new batch of CDs,” he said, pointing to the possibility of the two banks offering the CDs until February.

The macro backdrop: Unlike last year's CDs, when the 25% yield was significantly above the 18.7% urban annual inflation recorded a month before the CDs were announced, this time around the yields are nowhere near the 34.6% rate of inflation recorded in November. Folks with maturing CDs can also opt to hedge through gold, real estate, foreign currencies, T-bills, or by trading on EGX — all of which have generated much higher gains over the last year and have been seen in hindsight as missed chances.

So why would savers choose the recently issued CDs? The target audience for these CDs is pensioners, people with low investment awareness, or those who need a stable return with no risk, economist Ahmed Shawky told Enterprise.Shawky pointed to treasury bills as an alternative to CDs that have yields of 20-22% after tax and can be sold whenever easily and without enduring losses, but told us that — unlike CDs — they require a more experienced investor. Other investments like gold and real estate are also promising alternatives, but are more long-term and require a lot of liquidity, making them less attractive to investors who seek periodical returns to cover life expenses.

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