Banks operating in the Egyptian market applied limited cuts in their interest rates within the first two working days (Sunday – Monday) after the Central Bank of Egypt's (CBE) decision to cut its basic interest rates by 1% last Thursday. Since Sunday, banks have held intensive meetings to discuss the fate of interest rates on their saving vessels, retail products, and loans. Upon the issuance of the CBE's decision, interest rates on 29 saving certificates issued by 23 banks were affected, as they are linked to basic interest rates at the CBE. The National Bank of Egypt decided last Thursday to keep interest rates on fixed-rate saving certificates unchanged, to remain at 14% for three-month certificates and 14.25% for quarterly return certificates. Banque Misr also decided to keep the interest rate of its 3-year saving certificates with a monthly return of 14% unchanged. The bank, however, cut interest on VIP accounts by 1% across all segments. In a similar move, the National Investment Bank decided to maintain the interest rate of the investment certificate “B” with a monthly return for one year at 14.75%, and the interest of the investment certificate “B” with a quarterly return for three years at 14.25%. Last Thursday, a CBE official said interest rates on individual bank saving certificates would not be cut, despite the basic interest cut. The National Bank of Kuwait – Egypt (NBK) maintained the interest rate of its 3-year monthly fixed rate saving certificates at 12% and 12.5% for quarterly returns. The bank merely reduced the interest rate by 0.5% on saving and deposit accounts. Alexbank decided to cut interest rates on variable-rate savings certificates by 1%, and to suspend the three-year fixed-rate certificates until the fate of interest is settled. The Egyptian Arab Land Bank decided to reduce the interest rate on variable yield certificates by 1% to 13.5% compared to 14.5%, and to reduce the interest rate on deposits by 0.125-0.25%. The bank decided to fix interest on triple saving certificates at 12.50% for the monthly return certificate and 12.75% for the quarterly return, in addition to fixing the return on saving accounts. The yield on the treasury bills floated by the CBE on Sunday also dismissed the decision to cut interest rates. The CBE has issued, on behalf of the Ministry of Finance, two T-Bill issuances of EGP 18.75bn. The first tender of EGP 9.25bn was issued for 91 days. The accepted interest rate ranged between 15% as the lowest price, and 15.8% as the highest price, and 15.605% on average, virtually unchanged from the last similar tender issued before the decision, where interest rates were 15%, 15.8%, and 15.627%, respectively. In the second tender, the CBE requested EGP 6.5bn for 273 days. The acceptable interest rate ranged between 14.6% as the lowest price, 15.401% as the highest price, and 15.261% on average, against 14.5%, 15.27% and 15.261% on the latest similar tender offered on Sunday last week.
