Revealed: Two factors affecting expats' savings in UAE

Sixty-two per cent of those saving in the UAE plan to increase their savings in the next six months, with 35 per cent of non-savers actually aiming to adopt saving habits during the same period, reveals National Bonds Corporation’s (NBC) 2014 savings index for the UAE.

The savings index, which is based on a survey of 3,000 respondents, found 78 and 64 per cent of the respondents, saying, “Increased house rents and costs of utility were putting most pressure on households across the country.”

Eighty-two per cent of Asian expats, 77 per cent of Arab expats, 65 per cent of Emiratis while 53 per cent of Western expatriates viewed housing rents to have a big impact on their household expenses.

Utility expenses such as water and electricity was considered the second biggest household expense with 68 per cent of Asian expats, 66 per cent of Emiratis, 61 per cent of Arab expats and 34 per cent of Western expats saying, rising costs have had a direct impact on their family budgets.

 “The 2014 savings index results are clearly indicative of negative market factors inhibiting segments of the UAE population from developing a healthy savings habit and achieving financial stability. Nearly 54 per cent of the respondents listed inflation and high costs of living as key factors that impact their current annual savings plan,” said Mohammed Qasim Al Ali, Chief Executive Officer, NBC.

“Our survey study majority of the UAE residents disburse a significant portion of their expenses on house rents and utility bills. With over half of the respondents in the UAE having loans, with the majority paying out either one or two loans or holding at least two credit cards,” he added.

Despite the rising cost of living in the country, the NBC, a Shariah-compliant savings company, registered a 7.3 per cent increase its bond holder funds, which stand at Dh5.2 billion this year till November. There are currently over 700,000 bond holders.

Based on three key factors of financial stability, potential for savings, and the existence of an enabling savings environment, the survey found the UAE’s savings environment has remained unchanged with 26 per cent of the residents here claiming “2014 as a good time to save.” Westerners and Emiratis showed the most positive sentiment across nationalities with 38 per cent and 34 per cent respectively.

Among the low-income category (residents earning up to Dh3,000 per month), 36 per cent of those polled in the UAE admitted saving regularly, showing a 5 per cent increase over 2013.

Al Ali revealed that NBC was in talks with many companies to allow their low-income employees to become “regular savers” though a direct deduction from their wages protection system cards. The product will be launched in second quarter of 2015.

The savings company, which offers Dh49 million from the company's own funds (Mudareb) as daily, weekly, monthly, and annual dividends to bond holders, will announce the profit rate for 2014 in February 2015, Al Ali stated.

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