Chief Economist at Bank Islam who is featured regularly in BusinessToday estimates the Employees Provident Fund to declare a dividend payout of anywhere between 5.2% to 6% to members for 2021.
This comes as Mohd Afzanizam is of the opinion on the back of the fund’s higher gross investments and better capital market performance.
He added EPF’s gross investments for the first nine months of 2021 was already 7.7 percent higher year-on-year at RM48.02 billion, compared with the same period in 2020. In that sense, there could be a chance that the dividend rate could be better than in 2020. “I think it should at least match the 2020 level, if not better,” and estimated that the dividend would likely be between 5.20 percent and 5.40 percent for 2021.”
In 2020, the pension fund manager declared a dividend of 5.2 percent with a payout amounting to RM42.88 billion for conventional savings and 4.9 percent for Shariah savings, with a payout totaling RM4.76 billion.
Mohd Afzanizam said the chance for a better dividend rate in 2021 would be higher should corporate earnings in the fourth quarter turn out better.
Furthermore, EPF has also been diversifying its portfolios into overseas markets and incomes from foreign equities have made a significant contribution to its total income, he noted.
“So their portfolio diversification strategy has really paid off and it could be translated into a sustainable dividend rate going forward,” he added.
Unison with the view, Ambank Group chief economist and research head Anthony Dass said despite some domestic challenges, the overall performance of the local capital market was favourable, hence the dividend payout is expected to hover between 5.45 percent and 6.0 percent.
“With the economy starting to rebuild, more people will be employed and at the same time more jobs would be created from new lines of businesses that will rebuild EPF savings,” he said. “However, for the savings level to reach 2019 levels, it will depend on how much of the future contributions they can place in the EPF.”
“At the same time, the coverage and adequacy of social protection, particularly towards the self-employed and those in the informal sector, must be strengthened,” Dass added.
On the outlook for 2022, Mohd Afzanizam noted that a rising interest rate environment would help EPF’s revenue in the fixed income and money market instruments as the issuance of the new bonds would be pegged at a higher rate which translates into a higher coupon rate.
