Dubai – MENA Herald: National Bonds Corporation (National Bonds), the leading sharia-compliant savings and investments company in the UAE, has announced the results of its 2015 Savings Index for several GCC countries based on a survey conducted in Saudi Arabia, Qatar, Bahrain, Kuwait and Oman.
Compiled by Sondos Market Research, the survey aimed to gain feedback from respondents on three key areas – financial stability, potential of saving and existence of an enabling saving environment in their respective countries.
The GCC results show clear similarities in regards to the potential of saving, with Saudi Arabia scoring 77.5%, and Oman and Qatar scoring 76% each.
The index has further revealed that 89% of survey respondents in Saudi Arabia are financially stable and 56% plan to increase their savings, while 89% of respondents in all the other GCC countries combined admitted to being financially stable and 52% aiming to increase their savings.
The index also showed that 51% of respondents in Saudi Arabia plan to start saving, compared to 41% for the other surveyed GCC countries combined.
While 41% of the respondents in Qatar, Bahrain, Kuwait and Oman said that 2015 was an unsuitable year for saving, 33% claimed the same in Saudi Arabia. On the other hand, 33% of those surveyed in Saudi Arabia and 22% in other surveyed GCC countries offered a positive response with regards to 2015 as a good year for saving.
On the factors that made 2015 a positive year for saving, 44% of respondents cited available investment opportunities. Among those that responded negatively, 45% said that high living expenses and inflation were the main reasons that made 2015 unsuitable for saving.
In terms of regular saving during 2015, the index revealed that 59% of respondents in Saudi Arabia saved regularly, of which 83% saved on a monthly basis. As for the rest of the surveyed GCC countries, 62% of respondents saved regularly, of which 89% saved on a monthly basis.
Responding to a question on whether savings occurred in line with 2015 plans, 57% of participants in Saudi Arabia and 58% in other GCC countries said they saved less than planned, even though 61% of those surveyed in Saudi Arabia and 46% in other GCC countries received a salary increment or a financial bonus during 2015. On the same note, 60% of the respondents in Saudi Arabia expected their income to increase in 2016 compared to 51% in other GCC countries.
Among the factors that are likely to affect the saving plans of respondents during 2016, inflation, high living costs and unexpected expenses featured high. In Qatar, 78% of participants cited unexpected expenses, while 55% mentioned inflation and high living costs. In Saudi Arabia, 40% of participants said they may be affected by high living costs, while 24% mentioned accumulated loans.
The index also showed that 73% of Saudi Arabia respondents and 74% of other GCC countries’ considered their savings inadequate for the future. Meanwhile, 52% of those surveyed in Saudi Arabia and 56% in other GCC countries cited long-term career uncertainty and children’s education as the most prominent factors that will encourage them to start saving.
According to the index, most GCC respondents regard personal savings as very important (61% in Saudi Arabia and 66% in the other surveyed countries). Yet, 47% of participants in Saudi Arabia have started saving during the last 1-6 years, while only 6% of the participants started saving more than 10 years ago.
Commenting on the index results, Mohammed Qasim Al Ali, CEO of National Bonds, said: “The index for Saudi Arabia and the other GCC countries featured many positive indicators with regards to the potential of saving, with an 8% increase in Saudi Arabia compared to 2014. In addition, financial stability numbers have emerged quite high in Saudi Arabia (77.5%), and in Oman and Qatar (76% each).”
He added: “Most respondents admitted to saving regularly. This indicates a growing awareness of the importance of financial planning. Saving did not exceed 20% of the annual income for most savers in the GCC, while 26% did not make any savings in 2015. Since financial behaviour reflects people’s priorities, the index shows that buying property is the top motivation for saving in Saudi Arabia, while children’s education influenced most respondents the other surveyed GCC countries.”
Al Ali further explained: “In terms of financial planning and the willingness to save, 2016 looks promising with most respondents indicating a firm resolve to put aside better funds for the future. Although the index has highlighted several challenges that can affect the saving behaviour of most respondents, namely loans and consumption-driven lifestyle, long-term career uncertainty and education costs are strong motivations for savers to commit to a special regular saving plan. In Qatar for example, 78% of participants are worried that unexpected expenses may have a negative impact on their saving plans.”
“Sharia compliant saving products are highly popular in Saudi Arabia (20%) compared to traditional savings accounts (13%). I believe the best way to have a regular saving plan is to adopt a simple and seamless process, such as allocating a certain amount of the monthly salary for saving. In Saudi Arabia, 66% of the respondents found this to be the best saving approach,” Al Ali concluded.
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.