The pilgrim fund’s financial position has strengthened with assets exceeding liabilities by RM1.2b
By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL
Lembaga Tabung Haji (TH) made a RM440 million net profit in the first quarter ended March 31, 2019 (1Q19), following financial restructuring and cash injection undertaken at the end of December 2018.
In a statement yesterday, TH announced a revenue of RM623 million for 1Q19. The pilgrim fund stated that its financial position has strengthened with assets exceeding liabilities by RM1.2 billion, supported by an improvement in the investment portfolio and healthy asset quality after an impairment was realised in 2018.
TH, however, did not disclose year-on-year comparisons.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the fund’s performance was commendable in the current economic and market situation.
“I think it was commendable against the uncertain, volatile market in 1Q19. The FTSE Bursa Malaysia KLCI was not doing well and there were fund outflows. Overall, it was a decent result,” Mohd Afzanizam told The Malaysian Reserve (TMR) yesterday.
Mohd Afzanizam added that the issuance of sukuk by special-purpose vehicle (SPV) Urusharta Jamaah Sdn Bhd should boost TH’s income for the rest of the year.
TH expects the sukuk issuance to provide a 4% return on investment and give a return close to RM800 million a year.
The fund’s revenue is set to improve on the implementation of a new investment adjustment process that is more sustainable and stable.
Mohd Afzanizam expects TH’s current fixed-income strategy to be rewarding in light of current market conditions.
“It is a favourable strategy to have a large exposure in fixed income in the current market conditions. Returns are more or less certain and it can shield TH from market volatility,” he said.
Putra Business School associate professor and manager of business development Dr Ahmed Razman Abdul Latiff said TH is on the right track to recovery as the 1Q results suggest.
“TH must continue to manage its investment prudently with a high standard of governance,” Ahmed Razman told TMR.
TH group MD and CEO Datuk Seri Zukri Samat stated previously that the fund’s exposure to the equity market was “too high” and had undermined its role as a haj institution.
Under its turnaround plan, TH will take a low-risk approach and target to have between 60% and 70% of its investments in fixed income and trim its multi-asset portfolio from 50% to 30% or 40% level depending on the fund size.
Mohd Afzanizam said the weaker global economy and review by FTSE Russell on Malaysian government bonds in the World Government Bond Index could pose downside risks to TH’s investment returns.
The Malaysian bond market is facing the risk of being removed from the global index provider pending a review in September.
In December last year, TH transferred underperforming assets consisting 29 real estate properties, an unlisted company and shares in 106 domestic listed companies for RM19.9 billion to Urusharta Jamaah, an SPV wholly owned by the Ministry of Finance, to restore its balance sheet.
A detailed breakdown of the RM19.9 billion figure showed the transfers were done at 120% above market value.
TH revealed yesterday that more than 91,000 new savings accounts were opened in 1Q19, increasing the total number of depositors to 9.3 million.
TH recorded new savings of RM4.3 billion, while withdrawals totalled RM4.6 billion.