AT present trying times, there is high degree of awareness among fund managers to ensure the highest returns possible.
Even the most conservative of funds are no exception. In this regard, Lembaga Tabung Haji (TH) or the pilgrims fund board aims to provide stable profit distributions to its depositors in line with its mandate to manage the funds of Muslims planning to fulfil their hajj obligation.
A more sustainable distribution rate is crucial for TH because pilgrims will need to wait for their turn for hajj due to the quota set by the Saudi Arabia Government.
“This is our most important responsibility. We have to ensure that TH continues to operate for more than a century to allow our pilgrims to complete their religion,” TH group managing director and CEO Datuk Nik Mohd Hasyudeen Yusoff pointed out.
“This means the safety of our investments is paramount and TH cannot afford to take on investments that are too risky.”
Being risk-adverse, TH has to work hard to explore investment opportunities in search of higher returns despite the challenging market conditions.
Commenting on TH’s financial performance for 2020 following Tuesday’s profit distribution announcement, Nik Hasyudeen said TH achieved better profits mainly due to its improved performance, stronger financial position and a more efficient cost management.
“The profit distribution for 2020 was also more competitive compared with returns from fixed deposits in Islamic banks,” Nik Hasyudeen added. To illustrate, the average 12-month retail deposit rate for Islamic banks in 2020 was 2.56%.”
To re-cap, TH has declared a profit distribution of 3.10% (after zakat/tithe) for the financial year ended Dec 31, 2020. The distribution for 2020 involves a total amount of RM2.24 bil compared with RM2.14 bil for 2019.
TH’s financial position remained stable as of end-December last year with total assets exceeding total liabilities by RM3.68 bil (prior to the distribution of profits to depositors). Its total assets stood at RM81.85 bil with total liabilities at RM78.17 bil.
Looking ahead in 2021, TH expects a more challenging operating environment where investors will be pressured to look for higher returns amid a soft economy.
However, the efforts by various countries, including Malaysia, to ensure their population are vaccinated against COVID-19 should support the continuing initiatives towards economic recovery.
It will also continue its efforts to rebalance its investment portfolio especially in replacing low-yielding assets with those that can provide better returns to depositors.
This includes providing more focus on overseas investments and ESG (environmental, social and governance)-based investments.
“TH remains steadfast in meeting its purpose to help Muslims conduct their pilgrimage while protecting their welfare, navigating the various challenges and changes over the years,” added Nik Hasyudeen. – March 3, 2021