KUALA LUMPUR, March 3, 2021 - Lembaga Tabung Haji (TH) is aiming to provide stable profit distributions to its depositors in line with its mandate to manage the funds of Muslims planning to fulfill 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. This means the safety of our investments is paramount and TH cannot afford to take on investments that are too risky,” said Datuk Nik Mohd Hasyudeen Yusoff, Group Managing Director and Chief Executive Officer of TH.

However, TH will continue to work hard and explore investment opportunities in search of higher returns despite the challenging market conditions.

An improved performance drives competitive returns

“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,” Datuk Nik added. To illustrate, the average 12-month retail deposit rate for Islamic banks in 2020 was 2.56%.

Datuk Nik was commenting on the financial performance of TH for 2020 following the profit distribution announcement made on Tuesday by YB Datuk Dr Zulkifli Mohamad Al Bakri, Minister of Religious Affairs in the Prime Minister’s Department. TH recently announced its profit distribution of 3.10% (after zakat) for the financial year ended 31 December 2020.

The distribution for 2020 involves a total amount of RM2.24 billion compared with RM2.14 billion for 2019.

“Alhamdulillah, TH recorded an improved financial performance (unaudited) for 2020 with net profit after zakat rising 22% or RM397 million to RM2.23 billion compared with 2019,” Datuk Nik added.

The performance was supported by its fixed income investments that generated RM1.90 billion in income, equity investments with income of RM430 million, property investments with RM352 million and Islamic money market instruments contributing RM318 million in income.

TH also remains committed to protecting the interests of depositors with more than half of its asset allocation (51%) invested in sukuk offering fixed and recurring income. This is in line with its Strategic Asset Allocation (SAA) which emphasizes long term investments providing safe and recurring income with tolerable risk levels.

Maintaining resilience for future challenges

TH's financial position remained stable as at 31 December 2020 with total assets exceeding total liabilities by RM3.68 billion (prior to the distribution of profits to depositors). Total assets stood at RM81.85 billion and total liabilities were RM78.17 billion.

TH also allocated zakat payments of RM106 million for 2020 compared with RM86 million in 2019. Therefore, depositors no longer have to pay zakat on their savings and profit distribution.

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 ESGbased (environmental, social and governance) 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.

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TH Aims For Stable Profit Distributions Moving Forward