UAE: Why residents are opting for longer saving deposits with banks, schemes

Residents in the UAE are increasingly opting for longer saving deposits with banks and saving schemes. The reason behind this? They want to cash in on high returns amid high interest and profit rates before they begin to decline.

“People are now opting for longer periods of saving products, which we offer through our millionaire product, the Second Salary, and also the Booster products, where we offer between three and 10 years of investments.

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"Everybody 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. Therefore, they’re better off than renewing it in the financial institution year by year, because they’ll get less returns,” said Mohammed Qasim Al Ali, Group CEO of National Bonds.

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Significantly, interest rates in the UAE are expected to drop this year in line with the US Federal Reserve. Analysts expect the Fed to cut rates twice this year.

Instead of interest rates, Shariah-compliant banks and financial institution, therefore, offer profit rates to depositors.

Under National Bonds’ Second Salary saving programme, residents can start saving with Dh1,000 a month. They can choose a tenure of three to 10 years and earn strong returns.

“More people have now started looking at the savings journey not as an obstacle but as an enabler to reach their financial goals. So there is a huge psychological shift that we have seen. Secondly, because of the high interest rates, people now 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,” Al Ali told Khaleej Times in an interview.

He elaborated that savings are gaining momentum across low, middle and high-income classes.

Up to 4.75 per cent return

The Sharia-compliant savings and investment company on Monday announced that bondholders earned up to 4.75 per cent in returns on their savings in 2024, as customers benefited from high interest rates.

National Bonds witnessed a 51 per cent increase in regular savers in 2024. It added 45,800 new customers last year, underscoring heightened interest in structured savings. Its investment portfolio surged to Dh15.8 billion in 2024, achieving 22 per cent growth over the past year.

The company is also exploring to expand AI-enabled solutions that will interact with customers. “For example, we are exploring robot advisor, whereby customers can enjoy talking to an AI-enabled solution whereby they give them advice on how and where to save, how to diversify their portfolio and how to reduce their debt.”

The integration of AI-driven automated financial planning tools led to a 41 per cent increase in digital savings last year compared to 2023, it added.

Al Ali added that the company will launch an office tower in Barsha Heights in 2025 to expand its real estate portfolio. 

Waheed Abbas

waheedabbas@khaleejtimes.com

Waheed Abbas is Assistant Editor, covering real estate, aviation and other business stories that directly affect the lives of UAE consumers. He frequently reports human interest stories, too.