National Bonds Corporation (National Bonds), the leading UAE company specialised in a unique and investment Sharia compliant programme, has released its 2015 Savings Index findings based on a survey conducted among 2,000 respondents in the GCC region.
Compiled by Sondos Market Research, the survey aimed to gain feedback on three key areas – financial stability, potential of saving and existence of an enabling saving environment in their respective countries. Out of the total sample size, nearly 700 comprised UAE residents of Emirati, Arab, Western and Asian nationalities.
In key outcomes, the UAE results indicate a significant increase in potential for saving and an overall positive outlook on financial stability in the nation.
More specifically, 84% of the respondents in the UAE admitted to being financially stable. Of the 63% that expressed intent to increase their savings, 53% comprised UAE nationals, 60% Arab expatriates, 86% Asian expatriates and 52% were Western expatriates. Only 6% of the respondents said they do not have any saving plan yet, while 50% of UAE nationals and 65% of Asian expatriates said they plan to start saving, and 21% of Arab expatriates indicated no interest in starting a saving plan.
An increased 30% of the respondents in the UAE regarded 2015 as suitable for saving, compared to 26% in 2014. While 36% of UAE nationals and 34% of Asian respondents thought 2015 was suitable for saving, 35% of Arab expatriates thought 2015 was unsuitable for saving, and 61% of Western expats preferred not to answer.
Responding to questions on why 2015 was a good year for saving, 44% of the respondents cited better available investment opportunities in the UAE. On the flip side, 45% said that high living expenses and inflation were the main reasons that 2015 was not suitable for saving. Interestingly, 44% of the respondents expected their income to increase in 2016.
In the context of regular saving, the index has revealed that Western expatriates are the most committed to regular saving. Leading with 48%, Western expatriates are closely followed by Asians at 44%, while UAE and Arab nationals scored 28% and 27% respectively. Among those that save regularly, 87% said they save on a monthly basis.
On whether savings occurred in line with their 2015 plans, 69% of those surveyed replied in the negative, while 74% of Arab expatriates admitted to saving less than planned compared to 70% for Westerners, 65% for Asians and 63% for UAE nationals.
When questioned about the factors that may negatively affect their saving plans for 2016, 64% cited residential rents as the main concern, 46% mentioned service bills and 45% chose education expenses.
The index also showed that 84% of the respondents in the UAE thought their savings are not enough for the future, compared to 77% in 2014. Of those that thought they were not saving enough, 74% were UAE nationals, 78% Western expatriates, 86% Arab expatriates and 86% comprised Asian expatriates.
The 2015 National Bonds Index dedicated a segment for takaful. The findings showed that 90% of those questioned did not have takaful coverage, while 42% have conventional insurance coverage. Of those surveyed, 37% have life insurance and 11% have insurance against job loss.
The index also indicated a difference in the culture of saving among nationalities. Of all respondents, 77% regard personal savings as very important. Yet, 47% have only started to save during the last 1-6 years. While 35% of Western expatriates started saving more than 10 years ago, 11% of UAE nationals started during the same time frame compared to 18% Arab expatriates and 17% Asians.
Elaborating on the index results for the UAE, Mohammed Qasim Al-Ali, CEO, National Bonds Corporation, said: “For our 2015 survey, we wished to explore the factors of regular saving and the commitment of nationals and expatriates to adopt permanent saving plans to safeguard against future challenges. The survey findings indicate that the motivation to continue saving vary from the initial motivation to start saving.
“Regular savers have a clear understanding of their priorities towards their families and the fluctuating realities of life. Therefore, they either commit their saving plans to cover the expenses of their children’s education or provide financial security to their families. Those that do not save, however, may start saving as they worry about losing their jobs, face difficulties paying for their children’s education or simply seek high returns on their savings. It is quite evident that understanding reality is the first step toward changing our status in life. The questions we need to ask is – do we have to wait for an emergency to start a saving plan?”
He added: “We are glad to note that 84% of the respondents think their savings are not enough for the future, compared to 77% in 2014. This indicates an increasing awareness of the importance of saving year after year, and that people’s dissatisfaction serves as a high motivation to continue and grow their savings.”
Furthermore, Al Ali explained: “The National Bonds Corporation Index helps people understand the social and economic situation of different segments of our community. We believe such clarity will eventually help a lot more people to improve future planning and review their financial behaviour in light of the economic and social changes. I am also glad that the gap between financial reality and the savings behaviour of a majority of UAE residents is growing smaller. Among savers, 87% save on a monthly basis and 63% of credit card owners did not charge more on their cards in 2015. Additionally, 64% of the same group pay their card debts every month.”
Regarding the addition of a section for takaful coverage to the 2015 savings index, the CEO said: “We were keen to know how many people in the UAE opted for takaful coverage. The findings interestingly revealed that 90% of the respondents did not. This validates our strategy to design an integrated savings product that includes takaful coverage. The product is called ‘Sanadi’ (My Support). Through automated deductions from savers’ monthly salaries, Sanadi provides rewarding benefits and profits, plus an extra protection for emergencies such as death, job loss and illnesses.”
Al Ali concluded: “We are pleased that the results showed that most respondents cited Sharia compliance as the first factor they look into when choosing a savings product. Notably, the participants expressed their trust of the company’s reputation and rewarding returns.”
National Bonds Corporation announced up to 4% in annual returns during 2015. The announcement of the 2015 Savings Index coincides with the company’s 10th anniversary and its campaign that was launched to raise awareness about the benefits of its Sharia-compliant product, which is the first of its kind in the UAE.