As a Financial Consultant and CEO of a well-established property firm, Maha Abdel Razek is more than qualified to express her feedback on the new Dollar-Saving certificates with a 7% return rate recently offered by the National Bank of Egypt and Banque Misr.
Luckily the Top50 Women Forum’s team was blessed to listen to what the experienced candidate had to say.
Abdel Razek voiced her thoughts with our team, stating: The dollar-dominated certificates with high returns of 7% are now available from the National Bank of Egypt and Banque Misr.
Normally, the highest return on dollar certificates ranges from 5% to 5.5%. These certificates are attractive because they offer a 7% return, a logical increase of 1.5% higher return.
She added: It is advisable for the yield to stay within the range of 1.5% to 2% as this is perceived as a reasonable return. Investors and banks alike prefer rational profits, as illogical returns can cause public concern and uncertainty. When the returns range between 1.5% and 2%, this creates a healthy profit margin for both the bank and the investor.
In addition to the 7% annual return, the dollar certificate offers the benefit of quarterly interest payments and the ability to obtain a loan. Sometimes, I need to exchange my dollars for different purposes, like buying a car or property or investing them in EGP certificates. Luckily, I can get a loan with a lower interest rate of 2% compared to the Central Bank of Egypt.
When I obtain a loan from a bank, the interest rate I receive is based on the Central Bank rate plus an additional margin of 3-5%. This allows me to secure a loan at a significantly lower rate while also having the option to borrow up to 50% of the value of my certificates in Egyptian pounds while keeping my dollars.
Many people prefer to hold onto their dollars instead of exchanging them for Egyptian pounds, which is why certificates are a practical choice.
Additionally, I have the option to earn a return in EGP with a higher interest rate of 9%, yet this is the best option if I want it as bulk to buy something without the need to exchange the dollars and with a rate lower than the market.
When asked about the Egyptian Banking system in General, Maha said: The banking system is one of the most significant globally, backed by several reasons. The world witnessed financial crises in the 1980s and the 1990s and the U.S. in 2007, resulting in several banks going bankrupt. However, our banks possess high liquidity, and the Central Bank governs and regulates all banks. To ensure the safety of the banking system’s liquidity, the Central Bank has always established guidelines.
Maha also remarked: Some say that they have gone to the bank to withdraw money but couldn’t get it on the same day and assumed the banks have liquidity issues. Yet, the real problem is the bank may not have the whole needed amount at its branch on this day, neither in USD nor EGP.
She concluded with this final piece of advice: It is better to inform the bank before withdrawing a large sum of money. Consequently, if I want to withdraw, for example, $100,000 or $200,000, it is better to inform the bank at least a day before the transaction. That is not considered an error in the banking system but rather precautions for security reasons.