Inas Abu Salem regrets many of the purchases she made on her credit cards, but the first was one of the worst.
It was bad enough that the oversized Louis Vuitton handbag cost her Dh7,000, but it wasn’t even her style.
Yet the 35-year-old Canadian-Jordanian did not stop there.
At the end of that first month, she had maxed her credit card at Dh20,000, so she signed up for another card and then another, until she was Dh70,000 in debt.
More banks are now trying to stop people such as Ms Abu Salem from getting into the same situation by teaching their customers how to manage their money better through financial literacy campaigns.
Yet it could be said that by doing so they are sending a mixed message. Many institutions have sales teams who push credit cards and loans but their financial literacy programmes urge people to think twice before taking on debt.
The accusation is inescapable but banks have little choice, says Jon Richards, the chief executive at the financial comparison site Compareit4me.com.
“Banks will always have to balance the need for new business with the need to be responsible lenders, which can sometimes lead to mixed messages,” he says.
“Ultimately, there needs to be joint responsibility from both banks and consumers when it comes to debt management.”
Ms Abu Salem, who lives in Abu Dhabi, accepts responsibility for the debt she accrued and readily admits she was the one who contacted the bank to ask for an increase in her limit.
When she finally faced the problem she started setting aside money she could afford to pay her cards off. It was hard work, but after two-and-a-half years she was debt free – and, incidentally, minus the handbag, which she gave to charity.
She may accept her part in it all, but she agrees banks have a duty to arm people with information.
“It’s like your doctor giving you drugs, but they need to tell you these have side effects. This is what happens. They need to have that conversation with their customers,” says the marketing and communications professional.
Ms Abu Salem could have benefited from Abu Dhabi Islamic Bank’s Smartmoney campaign, first launched in 2011, which stresses, among other things, the importance of balancing your finances.
Petr Klimes, the executive vice president and group marketing director at ADIB, says: “Soon after the bank’s rebranding in 2010, we wanted to do something that would be related to our brand values. One of the things we promised to customers is transparency. And we wanted to go beyond transparency, not hide anything and help people make the right financial choices.”
“We also saw there was a big need for it in the market. It is a great country and people tend to make a lot of money, but they do not always make the right financial choices when it comes to saving, budgeting, debt and so on. We have a good role to play in this area.”
Since then the Smartmoney initiative has targeted everyone from school pupils to the owners of small and medium-sized businesses to educate them about how to manage their money. Its booklet, available in every branch of the bank, is now in its third edition.
ADIB is not alone with most UAE banks having some sort of financial literacy programme in place.
HSBC decided against the traditional financial literacy route, but instead teaches its customers the importance of planning for retirement or paying for education.
Emirates NBD has several financial literacy initiatives, including Pay Yourself First, a financial education campaign that encourages customers to set aside savings as soon as they receive their salary.
And last month, Mashreq launched Foloosy, a digital initiative that means “my money” in Arabic, that aims to reach everyone in the UAE, not just its customers.
The launch followed the roll-out of services from the UAE’s first credit bureau last month; it began issuing consumer credit reports to banks and financial institutions. But Mashreq will not say whether the two are related, only that it reflects its chief executive Abdul Aziz Al Ghurair’s desire to give something back to society.
Both have the same purpose – to protect customers from overextending themselves financially.
However, some think the credit bureau could actually lead to an increase in lending.
“For a long time banks have based their decision to lend on whether someone worked for a listed company. Now they can look at current debts, salary, time in a job and other factors that actually contribute towards to a consumer’s ability to repay debts,” says Mr Richards.
“We have seen a sharp increase in the number of people applying for financial products this year, with an estimated Dh350 million worth of personal loan applications sent to UAE banks in September alone.”
Foloosy, like Smartmoney, aims to prevent people from taking on too much debt.
But why do banks run financial literacy campaigns at all?
“No bank wants their customers to delay or to default. No bank wants to risk its capital. These are the main fundamentals of banking,” says Aref Al Ramli, the vice president and head of electronic banking and innovation at Mashreq.
“When you create that awareness among customers, among prospects, among future customers, once they are aware, once they know the guidelines of financial literacy, they won’t over-leverage. They wouldn’t create a scenario where they are not able to pay back and so on.”
The message, however, is different depending on the audience. Schoolchildren receiving talks from ADIB, for example, are encouraged to save.
“When we go to universities the messaging becomes very different; these people are before their first job, before their first loan, so it is important they start on the right foot,” says Mr Klimes.
“We have seen that peer pressure in this market is quite strong. There is a lot of temptation. People drive nice cars and tend to overspend maybe on certain things, so it is important that people manage their finances from early on.”
Reaching out to future and current customers is one thing but measuring the success of a campaign is not as easy.
ADIB, for its part, is using research to determine whether UAE residents are becoming smarter at managing their money.
Last year it surveyed 1,200 people across the UAE to pinpoint the biggest issues. The results were not encouraging.
“Only 60 per cent of people are saving regularly. But only 36 per cent of people over the age of 35 are saving for their retirement and, that is across all the segments. That is a little worrying,” says Mr Klimes.
“We know that 12 per cent of people keep no track of their expenses. Only 60 per cent keep a really good track. And 10 per cent of people actually admit they spend more than they make, so they are getting more and more into [debt],” he adds.
Inas Abu Salem no longer spends more than she makes and only has one credit card, which she uses responsibly. She also plans some financial education of her own.
“I am going to tell my eight-year-old daughter I have been there. I have done that. I actually went through this,” she says.
“People don’t like to talk about these things and they don’t like to tell you they are not doing great, especially here in the UAE. Everybody is great. No, people do have money problems. But it is all hidden.”
Her advice to others in debt?
Arm yourself with information and make the most of the banks’ financial literacy campaigns, which can advise you on the best way to help yourself get back on track.
“Don’t be scared to ask,” she adds. “You have to face the facts. You messed up.”
Banks' financial literacy campaigns
Mashreq: Foloosy
The financial knowledge portal can be accessed by anyone. It features five areas – save, borrow, invest, insure and Islamic banking.
ADIB: Smartmoney
The programme covers saving, budgeting, debt management and how to build personal wealth. It has distributed 300,000 of its Smartmoney leaflets, which are available at its branches free of charge. The information is also available online.
Emirates NBD: Various initiatives
The Pay Yourself First programme encourages people to set money aside as soon as they are paid, while the bank has an app that allows customers to save between Dh50 and Dh2,000 by shaking their mobile, among other initiatives.
HSBC: Financial planning
HSBC’s approach does not focus on traditional financial literacy. It commissions research on topics including the future of retirement and the value of education to encourage people to think about their long-term goals and ambitions. It does, however, also educate customers about credit cards as part of its sales process.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
UAE currency: the story behind the money in your pockets
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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SHAITTAN
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UAE currency: the story behind the money in your pockets
The specs
Engine: Turbocharged four-cylinder 2.7-litre
Power: 325hp
Torque: 500Nm
Transmission: 10-speed automatic
Price: From Dh189,700
On sale: now
MATCH INFO
BRIGHTON 0
MANCHESTER UNITED 3
McTominay 44'
Mata 73'
Pogba 80'
UAE currency: the story behind the money in your pockets
The%20specs
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Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Gulf Under 19s final
Dubai College A 50-12 Dubai College B
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
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88 Video's most popular rentals
Avengers 3: Infinity War: an American superhero film released in 2018 and based on the Marvel Comics story.
Sholay: a 1975 Indian action-adventure film. It follows the adventures of two criminals hired by police to catch a vagabond. The film was panned on release but is now considered a classic.
Lucifer: is a 2019 Malayalam-language action film. It dives into the gritty world of Kerala’s politics and has become one of the highest-grossing Malayalam films of all time.
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Five healthy carbs and how to eat them
Brown rice: consume an amount that fits in the palm of your hand
Non-starchy vegetables, such as broccoli: consume raw or at low temperatures, and don’t reheat
Oatmeal: look out for pure whole oat grains or kernels, which are locally grown and packaged; avoid those that have travelled from afar
Fruit: a medium bowl a day and no more, and never fruit juices
Lentils and lentil pasta: soak these well and cook them at a low temperature; refrain from eating highly processed pasta variants
Courtesy Roma Megchiani, functional nutritionist at Dubai’s 77 Veggie Boutique
Timeline
1947
Ferrari’s road-car company is formed and its first badged car, the 125 S, rolls off the assembly line
1962
250 GTO is unveiled
1969
Fiat becomes a Ferrari shareholder, acquiring 50 per cent of the company
1972
The Fiorano circuit, Ferrari’s racetrack for development and testing, opens
1976
First automatic Ferrari, the 400 Automatic, is made
1987
F40 launched
1988
Enzo Ferrari dies; Fiat expands its stake in the company to 90 per cent
2002
The Enzo model is announced
2010
Ferrari World opens in Abu Dhabi
2011
First four-wheel drive Ferrari, the FF, is unveiled
2013
LaFerrari, the first Ferrari hybrid, arrives
2014
Fiat Chrysler announces the split of Ferrari from the parent company
2015
Ferrari launches on Wall Street
2017
812 Superfast unveiled; Ferrari celebrates its 70th anniversary
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KILLING OF QASSEM SULEIMANI
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Company%20profile
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QUALIFYING RESULTS
1. Max Verstappen, Netherlands, Red Bull Racing Honda, 1 minute, 35.246 seconds.
2. Valtteri Bottas, Finland, Mercedes, 1:35.271.
3. Lewis Hamilton, Great Britain, Mercedes, 1:35.332.
4. Lando Norris, Great Britain, McLaren Renault, 1:35.497.
5. Alexander Albon, Thailand, Red Bull Racing Honda, 1:35.571.
6. Carlos Sainz Jr, Spain, McLaren Renault, 1:35.815.
7. Daniil Kvyat, Russia, Scuderia Toro Rosso Honda, 1:35.963.
8. Lance Stroll, Canada, Racing Point BWT Mercedes, 1:36.046.
9. Charles Leclerc, Monaco, Ferrari, 1:36.065.
10. Pierre Gasly, France, Scuderia Toro Rosso Honda, 1:36.242.
Eliminated after second session
11. Esteban Ocon, France, Renault, 1:36.359.
12. Daniel Ricciardo, Australia, Renault, 1:36.406.
13. Sebastian Vettel, Germany, Ferrari, 1:36.631.
14. Antonio Giovinazzi, Italy, Alfa Romeo Racing Ferrari, 1:38.248.
Eliminated after first session
15. Antonio Giovinazzi, Italy, Alfa Romeo Racing Ferrari, 1:37.075.
16. Kimi Raikkonen, Finland, Alfa Romeo Racing Ferrari, 1:37.555.
17. Kevin Magnussen, Denmark, Haas Ferrari, 1:37.863.
18. George Russell, Great Britain, Williams Mercedes, 1:38.045.
19. Pietro Fittipaldi, Brazil, Haas Ferrari, 1:38.173.
20. Nicholas Latifi, Canada, Williams Mercedes, 1:38.443.
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
The five pillars of Islam
The years Ramadan fell in May
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
