The National Bank of Egypt (NBE), the country's largest public lender, approved to raise the interest rate by 1 percent on savings accounts on all maturities and 0.75 percent on deposits, according to an official at the bank. The Asset-Liability Committee (ALCO) in Banque Misr will on Monday look into the fate of the interest rate on their savings funds after the decision by the Central Bank of Egypt (CBE) on Thursday to increase the prices of the basic yield by 1 percent. Daily News Egypt has learned that there is a trend in the two banks to approve a limited increase of the interest rate on short-term savings funds only. It may range between 0.50 percent and 0.75 percent. Private banks await action from state banks and an increase on the revenues of treasury bills and bonds issued by the government before taking any action. Banks working in the local market invest most of their liquidity in the treasury bills and bonds issued on a weekly basis. The revenues of these instruments are considered the most important factors on which the interest rate of banks' savings funds are based. Public banks, acquiring 50 percent of the volume of deposits and loans in the Egyptian market, are considered a leader in the market in terms of determining interest rates. On Sunday, banks working in the local market began holding meetings to look into the future of interest rates on their deposits and loans, following the CBE's decision on Thursday to increase the interest rate by 1 percent. Private banks will not increase the interest rate on savings certificates until the interest rate on the treasury bills and bonds is increased and the government takes action, according to Osama Al-Manyalawi, assistant director general of the treasury in a private bank. He pointed out that there are savings certificates in which yields increase automatically after any increase in the CBE's basic interest rates. This happens because these certificates are linked to the CBE's revenues in terms of pricing. It is unlikely for interest rates to increase on deposits because most banks already provide distinct interest rates on most terms of their deposits, Al-Manyalawi said. "Banks are waiting to see the direction of the treasury bills and bonds throughout this week in order to determine whether or not they will increase the interest rates of their long-term savings funds," he added. For its part, the Ministry of Finance announced on Sunday an increase of interest rates on the treasury bill and bonds it issued for the terms of three and nine months within a range of 0.13 percent to 1 percent after the CBE's decision to increase interest rates. The ministry revealed on its website that the least yield on bills of three-month terms has jumped to 12.9 percent, while the highest yield increased to 14.1 percent, and the average reached 14.051 percent. These numbers are compared respectively to 12.082 percent, 13.101 percent, and 13.062 percent in the latest bill tender launched by the CBE for the three-month term. According to the ministry, the least yield on bills of nine-month terms has reached 14.10 percent, whereas the highest yield increased to 15.152 percent, and the average reached 15.118 percent compared to 13.979 percent, 14.151 percent, and 14.119 percent respectively last week. Source: Daily News Egypt
