Economists expect TH dividend to be 2.75-3.10% this year

KUALA LUMPUR – Economists anticipate Lembaga Tabung Haji (TH) to declare dividend in the range of 2.75 per cent to 3.10 per cent this year due to the adverse domestic and international economic environment and as TH continues to implement its turnaround strategies.

Putra Business School (PBS) Associate Professor Ahmed Razman Abdul Latiff said the Hajj Pilgrims Fund Board has now begun executing its defined strategies for the future during this difficult period of fragile markets as a response to the external and internal challenges.

“The dividend rate is projected to be comparable to, if not lower, than last year. It will almost certainly not be higher as the market is still recovering, keeping in mind that TH is facing challenges in sustaining profitability, declaring a good dividend, and, most importantly on the cost of hajj, which has now risen dramatically,” he told Bernama.

Ahmed Razman said the estimate was based on an assessment of TH’s performance in the first half of this year, which saw the fund’s operational and administration costs rise by 3.6 per cent, which is comparable to the current inflation rate.

In response to TH’s HIJRAH24 Strategic Transformation Plan, which aimed to future-proof the fund and ensure its relevance, Ahmed Razman said the plan is timely because TH needs to ensure that it continues to make profits, has assets that exceed its liabilities, and has enough resources to cover rising hajj costs.

“It could be that the current mechanism might not be sustainable for the longer term and I believe that TH must look into targeted assistance for the hajj, maybe for the Bottom 40 (B40) rather than a blanket assistance,” he said.

On TH’s plan to refine TH Act 1995, he believes that any value added that could give benefit to the depositors would be welcomed.

Prof Barjoyai Bardai of Universiti Tun Abdul Razak offered a more conservative view, highlighting that the dividend would track the movement of the current interest rate, which stood at 2.75 per cent.

“Remember that TH has not fully recovered from its troubles and is still on its turnaround plan, and they need to overcome outstanding issues before they can truly demonstrate its genuine performance,” he told Bernama.

Yesterday group managing director and chief executive officer Datuk Seri Amrin Awaluddin said TH is now focused on the turnaround plan for its group and would start looking into its subsidiaries which include TH Properties, TH Plantation, Bank Islam Malaysia Bhd and Syarikat Takaful Malaysia.

Barjoyai said TH’s assets are primarily fixed income assets, the fixed income return is determined by market interest rates and big income capital cannot be expected from their portfolio.

As of Sept 30, 2022, TH’s assets position comprised 60.1 per cent or RM52.79 billion of fixed income, property (8.7 per cent or RM7.63 billion), domestic equity 16.5 per cent (RM14.51 billion), foreign equity 5.1 per cent (RM4.49 billion), private equity 1.1 per cent (RM974 million) and money market 8.5 per cent (RM7.44 billion).

“For them to achieve the dividend rate of between five and six per cent, it will take three to four years after the turnaround plan is completed,” he added. – Bernama / pic TMR File