EPF declares 4.5% dividend for 2008

Written by Joe Chin
Monday, 16 March 2009 19:16

KUALA LUMPUR: The Employees Provident Fund (EPF) Board had on March 16 declared a dividend rate of 4.50% for 2008, but this was lower from 2007 due to higher investment provisioning resulting from the sharp fall in global equity prices. In 2007, the dividend was 5.8%.

“Despite the financial meltdown, the EPF recorded the highest ever earnings of RM20 billion in gross income for 2008. This represented an increase of 9.36% over the previous year’s gross income of RM18.29 billion,” said a Bernama report.

EPF chairman Tan Sri Samsudin Osman said EPF’s investment portfolio for the year performed better at the gross income level compared to 2007.

“However, due to the sharp decline in the equity markets, a large provision had to be made resulting in a marked reduction in net income,” he said.

Net income for 2008 was RM14.26 billion, after deducting allowances for diminution in value of equities and doubtful debts, dividends for withdrawals, investment expenses, operational expenses, and death and incapacitation benefit payments.

This represented a decrease of 15.47% over 2007 net income of RM16.87 billion.

Equities accounted for 34.82 per cent of the EPF’s total gross investment income. The EPF earned RM6.67 billion from equities which was the second largest contributor to income in 2008 compared to RM5.37 billion in 2007.

“Up until September last year, the EPF was doing well in equities. However, following the effect of the global financial meltdown, our performance in equity investments recorded a drop of less than 20%, which impacted our dividend payout.

“This, however, compares better with that of the KLCI which was down approximately 40% from end of December 2007 to December 2008,” said Samsudin.

As a result of the sharp fall in global equity prices and following a conservative provisioning policy in accordance with accounting best practices, the EPF made allowances of RM4.69 billion for diminution in value of both overseas and local equities, compared to only RM520 million in 2007.

Out of the 2008 provision, RM3.20 billion was allocated for overseas equities.

“The fundamentals of the companies we have invested in remain strong and we are confident that this provision will be written back once recovery takes place,” he said.