National Bonds mulls expansion

The Shariah-compliant savings scheme, which has grown into a Dh3.7 billion fund, believes that expanding points of sale is vital in realising its ambitious goal of becoming a Dh12 billion fund in the next five years, said Mohammed Qasim Al Ali, chief executive of National Bonds Corporation (NBC).

Also on the cards is new market forays in Indonesia, Saudi Arabia, Oman and Egypt in the coming years. Al Ali who has been instrumental in putting NBC into an aggressive growth trajectory, told Khaleej Times.

“We plan to launch saving schemes in Indonesia, the country with the largest Muslim population, and are also looking at markets in Saudi Arabia and Oman. India also promises a big market for us,” he said.

NBC, which is licensed and regulated by the UAE Central Bank, has formed an alliance with Emirates Post that will enable customers to purchase National Bonds savings certificates from over 100 Emirates Post offices across the country, which increases the National Bonds distribution network to more than 550 outlets, Al Ali said. “With the recent inking of an agreement with Swift, investors from around the globe can buy National Bonds through the global money transfer channel,” he said. As part of the aggressive growth plan, NBC has launched the biggest prize draw scheme in the UAE, offering 22,250 prizes every month including a mega Dh1 million prize, up from 404 prizes offered every month under the previous format. “This means, we will create 270,000 winners every year, almost half of our customer base.”

He said more than 91 nationalities had invested in National Bonds. Of this, 30 per cent investors are UAE nationals. While females constitute one third of the investors, more than 80,000 minors have invested in the scheme. About 98 per cent of bondholders are within the UAE.

Al Ali said NBC is also planning to open branch offices in Abu Dhabi, Al Ain, and Sharjah pending UAE Central Bank approval.

He said that NBC was targeting a 30 per cent growth in 2010 after achieving an overall growth of 44 per cent in value in 2009. It posted an annual profit rate of 3.54 per cent for 2009 in spite of a tough year. “In 2009, our customer base increased by 8 per cent to 560,000 bondholders from over 91 different nationalities.”

NBC is also carrying out studies and market research on new products, as part of on-going efforts to retain existing customers, as well as attract new bondholders. “Our vision is to become ‘everyone’s favourite place to save and invest.’ He said he was confident that NBC was well on its way towards achieving this goal.

On the company’s investment strategy, Al Ali said NBC would be looking at low-risk investment to outperform 2009 growth. The company will continue to invest in short-term instruments. Besides sukuks, NBC has invested in Skycourts, a residential project in Dubailand. It will also look for private equity opportunities. Al Ali ruled out investment in the real estate sector at least for the next one year. “The market conditions remain very uncertain. So we will wait.”

He said NBC was talking to banks to facilitate the pledging of National Bonds as collateral for loans.

On the redemption of bonds, he said that NBC allowed withdrawal of Dh10,000 per account per day. The company is also exploring the option of redemption through the Swift platform. One of the latest schemes launched by NBC is the Employee Saving Scheme, which will be offered to both government and private institutions. “This innovative new service would enable employers to add value to their staff welfare by providing extra benefits, which in turn, will encourage loyalty to the organisation and increase employee retention,” Al Ali said.

This scheme will offer employees an opportunity to save a portion of their salary on a monthly basis voluntarily seamlessly in National Bonds, which will also entitle them to all of the benefits offered by National Bonds.

Al Ali said the introduction of such a scheme is part of an on-going initiative by NBC to reach out to every individual within the UAE to encourage a healthy and regular savings habit. “It strives at creating more awareness within the society on the importance of saving now to ensure a secure future.”

Dubai Aviation City Corporation (DWC) with its visionary leadership is the first organisation in the UAE to adopt the Employee Savings scheme. DWC management was dedicated to spreading, amongst employees, the awareness of the benefits of such an exciting engagement. Meanwhile there are other government and private organisations that showed keen interest and plan to join this voluntary saving option. — issacjohn@khaleejtimes.com