Bumper month for Al Rayan Bank’s young savers

12 November 2018

It may have been a ‘Red October’ for some shell-shocked stock market investors, but Al Rayan Bank’s 90 Day Young Persons Notice Savings Account (YPNSA) holders had a red-letter day last month in the form of an unexpected bonus.

Because their money is invested mainly in property, in a Sharia compliant manner, rather than poorly-performing equities, more than 3,300 account holders received over 10 per cent more return on their savings than expected.

The account, which can be set up by parents or guardians for those under the age of 16, quotes an expected profit rate (EPR) of 1.30%, but actually paid out 1.44% last month.

The expected profit increase is a result of Islamic banks operating on the principles of risk and reward sharing. The investment savings deposited in the 90 Day Young Persons Notice Savings performed better than analysts predicted this autumn. As a direct result, Al Rayan Bank’s YPNSA customers have benefited.

Islamic banks, such as Al Rayan Bank, generate a profit rather than paying interest like conventional banks. The profit is paid to customers on a monthly basis, and although profit rates cannot be guaranteed, in 14 years of operation Al Rayan Bank has always paid at least the profit rate it has quoted to its customers, if not more.

As with all Al Rayan Bank’s products, the customer’s money is invested ethically. Customers are given a guarantee that their funds will only be invested in Sharia-compliant, ethical investments. These exclude all interest-bearing transactions and activities such as gambling, speculation, tobacco and alcohol.

Saquib Ismail, Head of Branches and Retail Deposits at Al Rayan Bank, said: “Saving for a child’s future is more important than ever, particularly as the cost of living continues to rise. Getting children involved in their finances from a young age is a useful tool for teaching about money management and will equip them with skills they need to become committed savers right through to adulthood.

“October was a dreadful month for some stock market investors, but it was a different story for young savers at Al Rayan Bank. We work on a profit basis where savers’ investments can sometimes achieve more than expected returns, just like in this case.”

Kamran Sarwar, customer at the Small Heath branch in Birmingham, said: “I opened a Young Person’s Notice Savings Account for my children because I wanted to introduce them to ethical banking from an early age. One of my children is about to turn 16, so I’m keen for him to appreciate financial responsibility while having an awareness of ethical finance too – something that’s difficult to enforce with a conventional bank. We were thrilled when the Bank overpaid its profit in October, but what’s really great for us is knowing we’ve received this ethically.”

90-day YPNSA accounts require a minimum deposit of £20 and can be in the name of anyone under the age of 16. Deposits may be made in cash, cheque or direct account transfer in the child’s or guardians name. Parents or guardians are the gatekeepers of the account until the child is 14 years of age, when the young person can gain approved access to make withdrawals from the account.

Al Rayan Bank is the UK's oldest and largest Sharia compliant bank. It increasingly appeals to customers of all faiths and none. As an independent UK bank, Al Rayan Bank is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority and the PRA.

* Al Rayan Bank is the largest Islamic bank in the UK by assets as per latest published accounts

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