EPF expected to deliver higher dividends than ASB

EPF 2021 dividends expected to be around 5.2% for Conventional Savings and 4.9% to 5.2% for Shariah Savings


THE Employees Provident Fund (EPF) is expected to pay a higher dividend than Permodalan Nasional Bhd’s Amanah Saham Bumiputera (ASB).

PNB yesterday announced a total distribution of five sen per unit for ASB unitholders, comprising a 4.25 sen distribution and a 0.75 sen bonus for the financial year ending Dec 31, 2021.

Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said EPF will be able to announce a higher dividend payout like PNB for 2021 as it has a greater asset amount, reaching almost RM1 trillion.

He added that EPF also has greater exposure to international equity investment compared to PNB, which always gives higher return on investment annually, compared to local equity where the FTSE Bursa Malaysia KLCI so far registered -7.8% growth this year.

Therefore, he is confident EPF’s 2021’s dividends will be higher than PNB’s, albeit not by too much.

“EPF’s dividend is normally lower than PNB, with an exception of last year’s dividend. I expect the EPF dividends for 2021 will probably be around 5.2% for Conventional Savings and 4.9% to 5.2% for Shariah Savings, making it two consecutive years that its dividends will be higher than PNB’s,” he told The Malaysian Reserve (TMR) when contacted yesterday.

According to Ahmed Razman, a total of RM20.8 billion has been disbursed under i-Lestari and RM58.8 billion under i-Sinar as at Nov 3, 2021. On top of RM21.5 billion approved under i-Citra, the total amount withdrawn would be RM101 billion.

Ahmed Razman noted the annual contribution is always on the higher side every year and 2021 shall see the annual contribution probably reach more than RM80 billion, with surplus around RM25 billion to RM30 billion.

In addition,, he said there will be no significant applications after this for these three programmes. Therefore, he deduced there is enough surplus every year to ensure that EPF’s dividend is not strained.

Similarly, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid believes the EPF should be able to deliver a decent dividend this year.

He emphasised that EPF’s portfolio diversification strategy, which goes into global markets, have resulted in a positive effect on their portfolio returns.

“This has helped to negate the lacklustre performance in the domestic equities space,” he told TMR.

Looking at the bigger picture, Afzanizam opined there should not be any comparison between these two funds since they are quite different in respect to mandates and objectives.

“In totality, it does help when both funds have been able to perform well this year, as it will help to enhance the wealth of the average Malaysians,” he noted.

The EPF declared dividends of 5.2% for Conventional Savings and 4.9% for Shariah Savings for 2020. In the previous year, EPF declared dividends of 5.45% for Conventional Savings and 5% for Shariah Savings.

In the last 18 years, the highest dividend rates EPF ever paid were 6.9% in 2017 and 6.75% in 2014. In total, the 2017 payout amounted to RM48.13 billion, an increase of 29.8% from 2016.

The EPF recorded a total investment income of RM34.05 billion for the first half of the year ended June 30, 2021 (1H21), which was an increase of RM6.79 billion, or 25%, compared to RM27.26 billion in 1H20.

Total gross investment income for the second quarter (2Q21) was RM14.77 billion, RM0.35 billion lower than the RM15.12 billion recorded in 2Q20.

EPF CEO Datuk Seri Amir Hamzah Azizan previously noted the fund delivered a resilient performance in 1H21, driven by the progressive recovery of the equity markets and most asset classes amid the global rebound.

He said the accelerating rollout of Covid-19 vaccines and the reopening of economies had supported a stronger performance for equities in the developed markets.