UAE: Why residents are opting for longer saving deposits with banks, schemes
More and more people in the UAE are turning to long-term saving deposits with banks and saving schemes. What’s the motivation behind this? They are looking to take advantage of extremely high returns while interest and profit rates are at their peak because they are about to begin declining.
UAE National Bonds Corporation had the following to say on the matter: “Now, people are willing to save for longer periods, which we serve through our millionaire product, the Second Salary, and also the Booster products where we grant from three to ten years of investment.”
Mohammed Qasim Al Ali, the Group CEO of National Bonds, explained, “Everyone knows that the rates will start going down as it is only a matter of time. So they want to lock yields from now. They’re now getting three and a half to four per cent return for another four to five years. So they’re better off than renewing it in the financial institution year by year because they’ll get less.”
Notably, the United Arab Emirates, along with the rest of the world, is watching as the interest rates are expected to drop this year when the US Federal Reserve does. Predictions show that there will be two cuts made by the Federal Reserve this year.
Profit margins rather than Shariah-compliant interest rates are what comes as a service to depositors from banks and other financial institution of the Emirate.
Residents can begin saving by subscribing to National Bonds’ Second Salary saving program with Dh1,000 per month. Not only are strong returns available for a tenure ranging between three to 10 years, but it can also be selected as an option.
“With high interest rates, more people prefer to place their savings in deposits across the banking system and National Bonds because of the high returns that they get almost risk-free,” said Al Ali when asked about his perspective on savings in the modern world. “So there is a huge psychological shift that we have seen. People have now started looking at the savings journey not as an obstacle, but as an enabler to reach their financial goals.”
He also noted that savings among all income classes is gaining momentum.
Up to 4.75 percent return
In 2024, customers significantly benefitted from high interest rates, and with their passive investment, bondholders were able to earn up to 4.75 percent returns on their savings within the Sharia-compliant savings and investment company. On Monday, being one of the foremost bond providers, National Bonds announced the high returns.
Under heightened interest in structured savings, National Bonds observed a 51 percent increase in regular savers in 2024. Last year, they added 45,800 new customers, further enabling an investment portfolio surge to Dh15.8 billion. With an increase of 22 percent over the past year, the company reported National Bonds investment portfolio achieving growth over the past year.
The company is considering broadening the scope of its client-facing AI solutions. “For instance, we are looking into developer client-facing products we refer to as robot advisors, where users can enjoy the conversation with an AI-enabled solution that advises them on how and where to save, how to diversify their portfolios, and how to manage their debt.”
The company noted that the integration of AI-based automated financial planning tools helped digital savings increase by 41 percent last year compared to 2023.
Al Ali said his company plans to open an office tower located in Barsha Heights as part of its real estate portfolio expansion in 2025.
Comments