Beltone Financial Holding said that the National Bank of Egypt (NBE) and Banque Misr decision to suspend their high-return savings certificates restores the ability for other banks to expand their deposit base.
Beltone Financial expects the market share of the banks to gradually improve as competition cools down, providing an outlet for the growth of financial positions.
At the same time, it believes that the NBE and Banque Misr decision will enhance the pricing opportunity at banks. This will, in turn, positively affect the cost of deposits with banks as well as net interest margin levels.
Beltone indicated that banks with a high percentage of retail deposits, including the Faisal Islamic Bank, Abu Dhabi Islamic Bank – Egypt (ADIB), the Commercial International Bank – Egypt (CIB), and Credit Agricole Egypt, are the main beneficiaries of this decision.
The NBE and Banque Misr decided to stop offering 15% fixed-rate savings certificates launched in mid-March.
Those savings certificate holders who have already invested in the vessel will continue to receive the same rates of return until their savings certificates mature.
Since March, the NBE has raised investments estimated at EGP 280bn from platinum savings certificates, while Banque Misr collected EGP 103bn from Ibn Misr savings certificates.
The National Investment Bank (NIB) has also decided to reduce the yield of three-year certificates issued by the NBE from 12% to 10%, two-year certificates from 14% to 10.5%, and one-year certificates from 13% to 10.25%.
Banking expert Tarek Metwally said that the 15% certificates have attracted over 2.5 million customers to Banque Misr and NBE, with savings reaching about EGP 383bn.
He added that this shows the extent of the impact on the market, and competitiveness. This has forced some other banks working in the Egyptian market to issue savings vessels for a three-year term that are attractive, and provide a monthly return to compete with those certificates and keep customers.
Metwally said that there is no doubt that the scrapping of high-interest certificates will allow banks to compete more in attracting deposits of the household sector during the coming period.
The quality of services provided by banks is one of the most important criteria on which to distinguish between them. It also provides a means of focusing on improving the quality of services during the coming period, which is the most important challenge to Egypt’s banking sector.