National Bonds Corporation Announces 2016 Savings Index for the UAE
National Bonds Corporation (National Bonds), the leading UAE company specializing in a unique and Sharia-compliant investment program, has released its 2016 Savings Index findings based on a survey conducted among savers and non-savers in the GCC region.
Compiled by Sondos Market Research, the survey aimed to gain feedback on three key areas - financial stability, potential for saving and existence of an enabling savings environment in their respective countries.
The survey revealed that 59 percent of respondents – 68 percent of men and 29 percent of women - are the sole earning members in the family, and therefore the only contributors to the family’s finances. Of the total number of respondents, 37 percent – 66 percent of women and 29 percent of men - are partial contributors to the family’s income. Fifty-two percent of the respondents participate in making financial decisions for the family.
In key outcomes, even with a 2.36-point decrease in the National Bonds Savings Index for the UAE, the results for the country indicate a significant increase in potential for saving and an overall positive outlook on financial stability in the nation.
More specifically, 85 percent of the respondents in the UAE foresee a stable financial status in 2017, and 64 percent plan to save more. Sixty-two percent UAE nationals, 65 percent Arab expatriates, 65 percent Asian expatriates and 50 percent Western expatriates expressed the intent to increase their savings in the next six months. Furthermore, a larger number of non-savers planned to begin saving in 2016, including 71 percent Asian expats compared to 65 percent in 2015, while the proportion remained the same for Emiratis at 50 percent and Arab expats at 88 percent.
A decreased 27 percent of the respondents in the UAE regarded 2016 as suitable for saving, compared to 30 percent in 2015. While 30 percent UAE nationals and 30 percent Asian respondents thought 2016 was suitable for saving, 47 percent Arab expatriates thought 2016 was unsuitable for saving, a 12 percent increase compared to 2015, while 46 percent Western expats preferred not to answer.
To questions on why 2016 was a good year for saving, 36 percent of the respondents cited better available investment opportunities in the UAE. On the flip side, 38 percent said that high living expenses and inflation were the main reasons that 2016 was not suitable for saving. Interestingly, 50 percent of the respondents received a pay rise and/or bonus in 2016. Of those respondents, 77 percent saved some of the additional money earned.
In the context of regular saving, the index has revealed that 91 percent save monthly, compared to 87 percent in 2015. At 46 percent, Western expatriates are the most committed to regular saving, closely followed by Asians at 45 percent, while Arab national savers accounted for 26 percent. UAE national regular savers increased from 28 percent in 2015 to 37 percent in 2016.
On whether savings occurred in line with their 2016 plans, 71 percent of those surveyed replied in the negative, with 76 percent Arab expatriates admitting to saving less than planned compared to 75 percent Westerners, 67 percent Asians and 64 percent UAE nationals.
When questioned about the factors that may negatively affect their savings plans for 2017, 40 percent cited high cost of living as the main concern, 27 percent mentioned loss of job (self or spouse) and 18 percent cited education expenses.
The index also showed that 89 percent of the respondents in the UAE thought their savings were not enough for the future, compared to 84 percent in 2015. Moreover, 91 percent UAE nationals, 75 percent Western expatriates, 94 percent Arab expatriates and 86 percent Asian expatriates believed they were not saving enough.
The index also indicated a difference in the culture of saving among nationalities. Of all respondents in the UAE, 75 percent regard personal savings as very important. Yet, 46 percent have only started to save during the last one to six years. Notably, 29 percent Western expatriates started saving more than 10 years ago, compared to 12 percent UAE nationals, 20 percent Arab expatriates and 17 percent Asians.
Elaborating on the index results for the UAE, Mohammed Qasim Al-Ali, CEO, National Bonds Corporation, said: “The statistics of our 2016 survey show a positive uptick in awareness of the importance of saving and we found that 68 percent of the respondents plan to start saving compared to 31 percent in 2015. The entire UAE population, including nationals and expats, are more financially aware with the increase in savings potential reaching 19 percent.”
He added: “These findings reflect the path laid out by the UAE government, consisting of strategies that aim to raise the happiness of the nation’s residents through providing stability and employment opportunities, as well as establishing and strengthening the concept of a cohesive society. It is quite evident that understanding the fluctuating realities of life is the first step towards changing our priorities and financial status.”
Al-Ali added: “Mounting loans remain one of the most likely factors to impact savings plans. Settling these debts is integral to achieving financial health and happiness for individuals. Debt management is not a common human attribute, and a significant number of people fall victim to the whirlpool of loans due to their illiteracy in budget management and risk assessment. Therefore, National Bonds is committed to continue developing awareness campaigns that help the population clearly understand the reality of their finances and prioritize according to their family’s needs. In line with the UAE’s visionary agenda of achieving financial security and as a result happiness for its citizens and residents, National Bonds also supports those looking to invest in projects with attractive returns and low risk.
“The results of the National Bonds Savings Index 2016 for the country indicate that 59 percent of respondents have loans, of which 17 percent even have two loans. Personal loans remain on top of the list with 67 percent and only 22 percent have a mortgage. UAE nationals represent the majority of car loan holders at 48 percent, while 50 percent Westerners have a mortgage. Although 72 percent of all respondents possess a credit card, most of them did not spend more during 2016 than they did in 2015. Notably, 65 percent pay any debt in full each month, which is an encouraging indication of responsible financial behavior that ensures financial stability for individuals and families and reflects positively on the nation’s economy.”
National Bonds, which is licensed and regulated by the UAE Central Bank, is a Sharia’a compliant saving scheme that provides UAE nationals, UAE residents and non-residents - with a credible and safe savings opportunity. Minors can also own National Bonds, provided the bonds are purchased by the parent/guardian.
Each bond costs AED 10, with a minimum purchase of AED 100 National Bonds Corporation PJSC announced an annual profit of 3.78% for 2010, which is higher than the market average of 0.46% on saving accounts and 2.40% on 12 months fixed deposit accounts.
NBC’s cumulative profit rate of 26.45 % over the last five years is among the highest payout in comparison to any other similar savings schemes in the UAE. Profit Rate distributed to bondholders recorded a year-on-year growth of 6.3%.
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