Banks avoid interest rate cuts to maintain depositors

Few banks implement interest rates cuts on savings accounts one week after CBE decision to cut basic interest rate by 1%

Several banks operating in Egypt made limited to no moves to cut interest rates on savings certificates and accounts a week after the Central Bank of Egypt (CBE) decided to cut its basic interest rate by 1%.
Daily News Egypt found out that only a few banks have opted to cut their interest rates, while most of them wittingly opted out of the CBE's scheme.
"The CBE's decision to lower interest rates was not the only determinant of interest rates at banks; rather, there are other determinants that each bank takes into consideration before making such bold moves, most notable of which is maintaining customer loyalty and the amount of cash flow," said head of the treasury department at one of the banks operating in the local market, which has not subscribed to the interest rates scheme.
At its first meeting in 2018, the CBE's Monetary Policy Committee (MPC) decided to lower the overnight deposit rate, the overnight lending rate, and the rate of the CBE's main operation by 100 basis points to 17.75%, 18.75%, and 18.25%, respectively. The discount and credit rates were also reduced by 100 basis points to 18.25%.
Following the CBE's decision, the interest rate on some savings certificates and loan products related to the CBE's basic interest rate delivered immediate results, showing a direct decline.
Meanwhile, the National Bank of Egypt (NBE) and Banque Misr discontinued offering their 20% savings certificates and replaced them with a new one-year certificate with a quarterly return and an annual return rate of 17%. Both banks also announced a reduction in the return rates, on new orders for other certificates with a period of three years, to 15% instead of 16%.
Moreover, the Industrial Development and Workers Bank of Egypt reduced the interest rate of one of its savings certificates from 16.25% to 15%, while it kept the interest rates of its other savings certificates unchanged.
Haitham Abdel-Fattah, head of the treasury department at the bank, said that the bank has limited the changes to only one savings certificate as it aims to maintain its customers and attract more liquidity required to implement its proposed expansion plan.
The National Bank of Kuwait-Egypt (NBK) also decreased the annual interest rate on its three-year fixed-rate certificates to 13.250%, to be paid every three months, and 13% annually. The bank reduced the interest rates on all savings accounts by 1.250%.
The Misr Iran Development Bank (MIDB) decided to reduce the interest rate of savings and youth accounts by 1% to reach 14%, as well as the interest rates on loans related to the CBE's basic interest rate by 1%.
Al Ahli Bank of Kuwait (ABK) reduced the interest rates of its triple variable-rate certificates of deposit to 18%, to be paid every three months, and 17.75%, to be paid monthly.
The Arab Investment Bank (AIB) also lowered the interest rates of its triple variable-rate certificates of deposit to 17.75%, to be paid every three months, and 17.25%, to be paid monthly.
The Export Development Bank of Egypt also reduced the interest rates of its triple variable-rate certificates of deposit to 18.75%, to be paid every three months.
The Egyptian Arab Land Bank (EALB) reduced the interest rates of its variable-rate certificates of deposit by 1% and fixed-rate certificates by 0.75-1%.
The Bank of Alexandria decided to reduce the annual interest rate on its new Alex Prime Certificate from 17.5% to 16.5%, to be credited to the account quarterly. It also reduced the Prime Gold Certificate's interest rate to 16.25%.