Private banks wait on public banks to make first move to raise interest rates

Return on treasury bills for 3, 9 months increased after CBE lifted interest rate

For private banks to raise interest rates on their saving instruments, they stipulated that interest rates on treasury bills and bonds should be increased and that public banks should raise the yield on their savings certificates.
Banks operating in the local market invest most of their liquidity in treasury bills and bonds that are put forward every week. Revenue from those tools is considered to be the base on which banks set interest rates on their saving instruments.
Public banks, which account for about 50% of the volume of deposits and loans on the Egyptian market, lead the market in determining interest rates.
Banks operating in the domestic market began holding meetings on Sunday morning to discuss the future of interest rates on deposits and lending operations, following the decision taken by the Central Bank of Egypt (CBE) to raise its interest rate by 1.5% on Thursday.
Banks did not adjust the interest rates on their savings instruments despite CBE's decision, first assistant general manager of the funds sector in one of the banks Osama El-Manialawy said.
He explained that private banks will not raise their interest rates until interest rates are raised on treasury bills and bonds. Moreover, private banks will only take this step when public banks do so first.
El-Manialawy pointed out that the interest rate on some savings certificates increased automatically when CBE raised its interest rate, as some of these certificates are linked to CBE's rates.
It is unlikely that the interest rates on the return of the saving certificates will exceed the 12.5% interest rate offered by the platinum saving certificates put forward by Banque Misr and the National Bank of Egypt recently, to avoid impacting the new certificates, which offer a 15% interest rate, offered by state banks in exchange for giving up dollars, El-Manialawy said.
He also ruled out the possibility that returns on deposits will increase soon, as banks already offer distinctive interest rates on most deposits.
The Ministry of Finance announced it will lift the interest rates on the treasury bills it put forward on Sunday, which mature after three and nine months, by 1.1% and 1.76% respectively, after the CBE raised interest rates.
The ministry explained, on its website, that the lowest return on the three-month treasury bills was increased to 13.11%. The maximum return was increased to 13.3%, with an average of 13.061%, compared to 11.351%, 11.609%, and 11.591% at the last tender for the same bills before the CBE's decision.
According to the ministry, the lowest return on the nine-month bills was lifted to 13.50%, and the maximum to 14.09%, with an average of 13.987%, versus 12.40%, 12.49%, and 12.478% last week.