Disclosure of the actual annual rates of return

Cairo on: 18 September 2014

Dear Chairman of the Board of Directors,

Greetings,

I would like to state that it has recently been observed that banks have continued to fail to comply with the disclosure rules contained in the Central Bank of Egypt Law and the Banking and Monetary Authority issued by Law No. 88 of 2003, specifically regarding the announcement of returns that do not reflect the actual annual interest rates applied that customers bear.

In this context, and in line with the Central Bank of Egypt's commitment to improving the consumer protection system, which contributes to enhancing customer trust in the banking sector and developing the principle of financial inclusion, the Board of Directors of the Central Bank of Egypt, in its meeting held on 16 September 2014, approved the following:

"Without prejudice to what Article (40) of the Central Bank and Banking and Monetary Authority Law issued by Law No. 88 of 2003 and its executive regulations (Article 17, Item (c)) stipulate, which requires banks to fully disclose to their customers the return rates and banking service prices they provide, such that the disclosure includes the effective annual return rates.

It is therefore necessary for banks to ensure the contracting, application, and announcement of effective annual interest rates (Effective Annual Rate) for the banking products provided to their customers (deposits, loans...), and in the case of contracting with certain parties from suppliers of goods and services to finance the purchase of those goods and services on installments, it is required in this case that the contract concluded with those parties include the necessity of contracting, applying, and announcing the effective rates. In light of the above, it is prohibited to contract, apply, or announce by flat rates (Flat Rate) through the bank or suppliers of goods and services."

Please accept our highest respect,

Hesham Ramy Abdel Hafez