Back in September 2020, NBE and Banque Misr stopped offering 15% fixed-rate savings certificates launched in mid-March. These high-interest rates were the highest in the market. Given that these high high-yield rates have been removed, what are the highest-yielding certificates of deposit (CDs) in Egypt in the second half of 2021? This article will compare certificates of deposit (CDs) of the top banks in Egypt to determine which offer the best investment.
What is a Certificate of Deposit?
A certificate of deposit (CD) is a type of savings account that usually has a fixed interest rate and time period (maturity period). CDs generally have higher interest rates than normal savings accounts but they don’t allow easy access to your money until a term ends. If you withdraw your money before the maturity date, you are subject to an early withdrawal penalty, which can significantly reduce the interest you earned on the CD.
Interest Rates of CDs across Egyptian Banks
There are different types of CDs. CDs can have:
- Different denominations (EGP, USD, EURO etc.)
- Floating -variable- or Fixed rates
- Different Maturity Dates
- Different Payout Periods (monthly, quarterly, semi-yearly, yearly)
- Different Minimum Amounts
To stay consistent throughout the comparison, I compared EGP denominated CDs with fixed interest rates, a maturity of 3 years and monthly payments across different banks in Egypt. I called different banks across Egypt to determine their rates. Here’s my summary:
|Bank Name||Annual Interest Rate||Maturity||Frequency||Min Amount||Denominations|
|MID Bank||11.25%||3 years||Monthly||EGP1,000||EGP1,000|
|Bank Misr||11.00%||3 years||Monthly||EGP1,000||EGP1,000|
|Egypt’s Housing & Development Bank||10.50%||3 years||Monthly||EGP1,000||EGP1,000|
|QNB Al Ahly||10.50%||3 years||Monthly||EGP1,000||EGP1,000|
|Bank Audi||10.50%||3 years||Monthly||EGP5,000||EGP1,000|
|Suez Canal Bank||9.00%||3 years||Monthly||NA||EGP1,000|
This comparison was conducted during July 2021. Please note that interest rates are subject to changes depending on various macroeconomic factors.
Clearly, state-owned commercial banks offer very high interest rates. Interestingly, Misr Iran Development Bank (MID Bank) has the highest yielding CD in Egypt of 11.25%.
Why should I buy CDs?
Generally, the more risky the investment is the higher the expected return of the investment. CDs of Egyptian banks offer a very good risk-reward ratio as they offer relatively high rates -even in real terms- and are considered a low risk investment. Headline urban inflation has hit 5.7% in August 2021 which is the highest in 9 months; nevertheless, it still means that the real return of the investments is very high especially given the low interest rate environment that we are currently living in. Interest rates in the US are hovering around 0% and in Switzerland and Japan have reached negative territory.
Other investments with high interest rates?
There are other investments that could potentially offer higher rates than CDs in Egypt. However, these investments are considered more risky. Buying Egyptian stocks, for example, could potentially offer returns that far exceed the returns of CDs -click here for my top lessons investing in the Egyptian stock market-. However, this requires a lot of research, hard work and good market timing. You could do everything right and still loose money in the stock market. That is why I would always recommend you not to put all of your money into stocks and to diversify your portfolio. Other high-risk, high-return investments that have recently been gaining momentum in Egypt are venture capital and private equity where you invest in startups or private companies but that’s a story for another post -click here to take a look at the top funded startups in Egypt-.