TABUNG Haji’s dividend for 2018, to be announced in March, will be highly anticipated as depositors look for confirmation that the troubled fund for Muslim pilgrims is on the road to recovery after years of operating on deficits.

While its management has tried to temper expectations of a high dividend like the 4.5% in 2017, economic analysts predict that last year’s rate will be lower but nevertheless “reasonable, given the rehabilitation process the fund is now undergoing”.

Economic analyst Nazarry Rosli expects the 2018 divided to match Malaysia’s projected headline inflation of 2.7% for this year.

“If (the dividend) is below 3%, depositors will scream. Any lower and it will be too sudden a drop and people will be upset.

“I think it should be around or above 3% because the inflation rate is close to 3%. Normally, that would be the watermark, it cannot be lower than the inflation rate,” Nazarry told The Malaysian Insight.

For the 2017 financial year, TH gave out a dividend of 4.5% to all depositors, with a bonus of 1.75% to those who fulfilled their haj (pilgrimage) obligation.

As a comparison with other funds, Amanah Saham Nasional Bhd (ASNB) recently announced an income distribution of 6.50 sen per unit and a 0.50 sen bonus for Amanah Saham Bumiputera (ASB) for the financial year-ended December 31, 2018.

Nazarry said the process of restoring TH’s performance will help to balance its accounts.

The pilgrims’ fund is undergoing a process to rehabilitate its underperforming assets and balance its assets and liabilities, after revelations that it had chalked up a RM4.1 billion deficit for 2017.

TH has also been paying out dividends since 2014 with liabilities exceeding assets, a violation of the Tabung Haji Act 1995 which governs the fund.

TH chief executive officer Zukri Samat on January 15 said its dividend rate would depend on the fund’s financials.

It completed transferring its underperforming equities and assets to a special purpose vehicle by the end of December so as to balance its accounts.

“They have transferred assets to the SPV. That is one of the ways to improve the accounts. It is one of the ways to divest of investments that have not brought returns. They should be able to withstand any pressure without facing too much losses,” Nazarry said.

Another analyst, Adli Amirullah from the Institute of for Democracy and Economic Affairs (Ideas), said the move to turn to a SPV would help restore investor confidence in TH.

This is if it can show it is able to give good dividends.

“The SPV is viewed positively by investors, compared to the fund’s situation in recent years. It can help to restore confidence in the fund.”

Going forward, Adli said other factors affecting TH’s performance would be local economic factors as well as choice of investments.

If it invests in overseas assets, the fund cannot escape exposure to challenges to the global economy, he said. – February 25, 2019.