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HomeAfricaEgyptian Banks Raise Personal Loan Interest to 32.5% | Sada Elbalad

Egyptian Banks Raise Personal Loan Interest to 32.5% | Sada Elbalad


Wed 27 Mar 2024 | 12:07 AM

Taarek Refaat

The two largest banks in Egypt, the National Bank of Egypt (NBE) and Banque Misr raised the interest on a number of individual loans, most notably the personal loan, to reach 32.5%, the highest level ever.

Banking sources told Al Arabiya Business that the Bank’s Asset-liability Committee (ALCO) held intensive meetings in recent days to re-pricing the interest on their banking products, whether for savings or credit, after the Central Bank raised the interest by about 6% this month.

The sources added that the rise in the cost of funds after increasing the interest of a large number of bank savings products prompted banks to also increase the interest on loans to maintain the balance and profit margin of the activity.

Personal loans account for the largest share of retail banking portfolios in most banks in the banking sector, due to the flexibility of customers’ use for multiple purposes. The value of a personal loan in banks currently ranges between 1.5 and 3 million pounds.

The interest on the personal loan at the NBE and Banque Misr ranges between 28.5% to 32.5% annually, decreasing according to the type of job and income level.

The two banks require a minimum salary of 1,000 pounds for government sector employees, and 2,000 pounds for private sector employees.

CIB, the largest private bank in Egypt, raised the interest rate by 2% on triple certificates of fixed return in the Egyptian pound to reach 24%, which is the bank’s second increase in 3 months.

While the interest on the Plus certificate reached 23% annually, and the return is paid monthly, with a minimum purchase of 1 million pounds and multiples of 1,000 pounds.

The interest on the Prime certificate reached 22% annually, and the return is paid monthly, and subscription to it begins with a minimum of 100 thousand pounds and in multiples of one thousand pounds.

The Arab International Bank (AIB) offered a 3-year savings certificate with an interest rate of 19.25% annually, the return paid monthly, 20.5% annually, the return paid quarterly, and 20% for the annual return.

Meantime, analysts ruled out that the rise in interest rates on retail banking products would cause a decline in demand for borrowing, especially with inflation rates continuing at high levels.

Although banks raised interest rates on their savings accounts, whether for certificates or savings accounts and deposits last January, the new Central Bank’s decision to raise interest to a new record level this March prompted banks to repeat the increase in line with the Central Bank’s indicative rates for deposits and lending.