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Banque Misr, NBE cut rates on their high-interest USD CDs. State-owned Banque Misr (pdf) and the National Bank of Egypt reduced interest rates on their high-interest USD certificates of deposit by 0.5 percentage points yesterday. NBE’s Al Ahly Fawran and Al Ahly Plus USD certificates now offer annual returns of 7.5% and 5.5%, respectively. Similarly, Banque Misr’s Al Qema and Elite certificates now offer annual returns of 7.5% and 5.5%, respectively. The lenders slashed rates by a similar 0.5 percentage points both in December and October.
Driving the move: “Both the National Bank of Egypt and Banque Misr have reduced interest rates on their three-year USD savings instruments, which were initially introduced with exceptionally high interest rates compared to USD deposit rates in the US or other emerging markets. These instruments were designed to attract USD deposits from Egyptians working abroad into the Egyptian banking system to help bridge the FX gap that existed before the reform measures announced by the central bank in March 2024,” banking expert Mohamed Abdel Aal told us.
“These products have now become too costly compared to similar interest rates globally,” Abdel Aal continued. “Since they have fulfilled their purpose, banks need to reconsider the pricing of these certificates. Such reviews are conducted periodically, and this latest reduction marks the third downward adjustment for these instruments. The aim is to maintain a competitive advantage for Egyptian banking products with a reasonable interest margin for customers while ensuring they remain sustainable for banks.”
Yet, the reduction is not expected to affect the attractiveness of these certificates, as there remains a significant interest rate gap between USD deposits abroad and the Egyptian banking sector’s offerings, Abdel Aal added.
This move reflects the banks’ confidence in the stability of the economy and comes in response to falling interest rates globally, economist Hany Abou El Fotouh told EnterpriseAM. “I expect the lenders to continue slashing rates if the exchange rate and FX flows remain stable,” he told us, adding that this may prompt savers to seek alternatives to CDs. Abou El Fotouh expects other local banks to follow in NBD and Banque Misr’s footsteps and cut interest rates.
