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EPF generates investment income of RM5.5b in 3Q
Written by Joseph Chin
Thursday, 03 December 2009 19:45
KUALA LUMPUR: The Employees Provident Fund (EPF) generated investment income of RM5.50 billion in the third quarter of 2009, up RM696.32 million or 14.51% above the RM4.80 billion in the second quarter.
The EPF said on Thursday, Dec 3 that on a year-over-year basis, 3Q investment income rose by 52.71% from RM3.60 billion a year ago.
Equities continued to contribute significantly to the EPF’s investment income, growing 34.67 per cent from RM1.74 billion earned in Q2 2009 to RM2.34 billion in Q3 2009.
“The continued rally in the stock market has helped to boost EPF investment income for the quarter. Provided that market recovery continues with no unforeseen disruptions till the year end, members can expect a higher dividend for 2009 compared to that of the previous year,” said EPF chief executive officer Tan Sri Azlan Zainol.
The EPF said loans and bonds' contribution increased 4.07% to RM1.89 billion from RM1.81 billion in 2Q. This was due to the regaining momentum and confidence in Malaysia’s corporate bond market, and in line with the EPF’s low risk policy to invest only in high-grade companies with credit ratings of AAA or AA.
It recorded an income of RM1.14 billion from investments in Malaysian Government Securities, up 2.54% from RM1.11 billion in 2Q.
Income from PROPERTIES [] rose 2.69% to contribute RM21.37 million for 3Q from RM20.81 million in 2Q.
However, returns generated from money market instruments declined 7.38% to RM87.31 million in 3Q from RM94.27 million in 2Q.
The EPF’s total fund size is RM361.09 billion compared with RM353.93 billion in 2Q.
The Employees Provident Fund (EPF) says contributors can expect a higher dividend this year if the market recovery continues smoothly for the remaining period.
"The continued rally in the stock market has helped boost EPF investment income in the third quarter," its chief executive officer Tan Sri Azlan Zainol said in a statement issued yesterday.
The EPF generated investment income of RM5.5 billion in the third quarter of 2009, up 14.51 per cent, or some RM696.32 million, from the second quarter.
Equities continued to contribute significantly to its investment income, increasing 34.67 per cent to RM2.34 billion in the third quarter from RM1.74 billion in the second quarter.
Another major contributor was loans and bonds, which rose 4.07 per cent to RM1.89 billion from RM1.81 billion.
This was attributed to the regaining momentum and confidence in Malaysia's corporate bond market and the EPF's low-risk policy of investing only in high-grade companies with credit ratings of "AAA" or "AA".
Third quarter income from the EPF's investments in Malaysian Government Securities and properties was up 2.54 per cent to RM1.14 billion and 2.69 per cent to RM21.37 million respectively.
However, returns from money market instruments declined 7.38 per cent to RM87.31 million.
Year-on-year, third quarter investment income was a 52.71 per cent increase from RM3.6 billion.
Overall, the EPF's fund size currently stands at RM361.09 billion compared with RM353.93 billion in the second quarter.
EPF net buyer in banking stocks
Written by Yong Yen Nie
Monday, 14 December 2009 11:41
KUALA LUMPUR: The Employees Provident Fund (EPF) has re-emerged as a net buyer in most domestic banking stocks, especially large-capped ones since November 2009, a significant shift from its net selling activities in the period prior starting in April this year.
According to latest filings on Bursa Malaysia, EPF has raised its stakes in MALAYAN BANKING BHD [] (Maybank) and CIMB Group Holdings Bhd to 808.7 million shares or 11.4% and 462.22 million or 12.9%, respectively.
A month earlier, EPF held 788.25 million shares or an 11.1% stake in Maybank and 441.68 million shares or a 12.3% stake in CIMB.
Prior to this, the statutory pension fund had pared down its holdings in Maybank and CIMB from April this year. At end-April, it had held 887.77 million shares or a 12.5% stake in Maybank and 623.48 million shares or a 17.4% stake in CIMB.
EPF also picked up PUBLIC BANK BHD [] (PBB) shares in November, raising its interests to 474.93 million shares or 13.4%, compared with 461.54 million shares or 13.1% at end-October.
EPF used to hold a 14.8% stake comprising 523.76 million shares in PBB but had pared down its stake in the banking group since end-August this year.
It also accumulated more AMMB HOLDINGS BHD [] shares and held a 13.4% stake or 405.35 million shares in the banking group as of end-November, compared with 395.38 million shares or 13.1% a month earlier.
EPF had been a net seller in AMMB shares since July. As at end-June, EPF had held 451.57 million shares or a 15% stake in AMMB.
Banking analysts said EPF was seen to be turning its focus on banking stocks, given the improved indicators in the financial sector and stronger expectations of an improved economic outlook in 2010.
A banking analyst with a local research house said several research houses had made overweight calls on the sector following banks’ better-than-expected financial results for the quarter ended Sept 30, 2009.
“With the anticipation of a stronger economy next year, EPF would want to have an investment strategy that benefits the most from the recovery,” she told The Edge Financial Daily last week.
The banking analyst added that while there was still some upside left in the banking stocks, most of them were approaching the target prices.
“(Nevertheless), we believe buying activities for banking stocks will continue for the first half of 2010, underpinned by stronger economic trends, while profit-taking would be more pronounced by June next year,” she said.
EPF had also accumulated shares in other mid-capped banking stocks, filings on Bursa Malaysia showed.
According to filings last Friday, EPF had raised its interests in HONG LEONG BANK BHD [] to 177.28 million shares or 11.2% from 171.32 million shares or a 10.8% stake at end-October.
The pension fund had also increased holdings in ALLIANCE FINANCIAL GROUP BHD [] (AFG) to 235.9 million shares or 15.24% at end-November from 226.02 million shares or 14.6% a month earlier. Filings showed EPF has been accumulating shares in AFG since end-June.
EPF slightly pared down holdings in EON CAPITAL BHD [] to 83.4 million shares representing 12.03% at end-November from 83.62 million shares or 12.06% a month earlier.
Recent Bank Negara Malaysia statistics showed that the decline in loans growth had bottomed in October, following a faster loans expansion of 7.5% year-on-year (y-o-y) compared with 7.2% in September this year.
In a report, ECMLibra Investment Research said the improving loans growth corresponded with a gradual recovery in economic conditions, as shown by a 1.2% contraction in gross domestic product (GDP) for the third quarter of 2009 (3Q09), which was healthier than 1Q09’s and 2Q09’s contraction of 6.2% and 3.9%, respectively.
“Going by the lending indicators, it would seem that there has been some pent-up demand for credit, as shown in the double-digit y-o-y changes in the applications and approval numbers.
“Net NPL (non-performing loans) ratio on a three-month basis remained unchanged at 2.1%, but has improved to 1.5% on a six-month basis (from 1.6% previously),” it said.
The research house added that the banking system’s capitalisation remained stable with risk-weighted capital ratio and core capital ratio of 14.5% and 13%, respectively.
This article appeared in The Edge Financial Daily, December 14, 2009.
The group is expected to make a gain of RM171 million from the sale of properties that house its banking operations.
CIMB Group is selling up to 65 properties that house its banking operations to the Employees Provident Fund (EPF) for RM302.4 million in a related-party sale and leaseback deal.
The group, in an announcement yesterday, said the sale will raise cash for CIMB Bank's working capital, reduce its risk-weighted assets by the book value of the properties and reduce its property risks.
The group is expected to make a gain of RM171 million from the sale.
The properties are currently used to house CIMB Group's banking business operations such as branches and offices.
The sale and leaseback deal will be not be its first.
It sold and leased back its current head office, Bangunan CIMB, and Menara Bumiputra-Commerce.
In late 2007, CIMB group managing director and chief executive officer Datuk Seri Nazir Razak said it was mulling over a third sale and leaseback exercise on some buildings as part of its plan to manage capital more efficiently.
The EPF is a major shareholder in CIMB Group, while Nazir is a member of the pension fund's investment panel. He abstained from voting on the deal.
SINGAPORE: The Employees Provident Fund (EPF) will be forced to buy more Islamic bonds this year as the Government cuts conventional note sales to the state-run pension manager, according to Royal Bank of Scotland Group Plc (RBS).
Malaysia planned to lower total sovereign sales to RM40.5bil in 2010 from RM52bil while maintaining the same number of Islamic bonds sales as in 2009, it said Dec 21.
It will also reduce conventional bond auctions and cut private placements to the EPF to two from eight in a bid to shrink state debt.
“The sharp reduction in private placements to the EPF in 2010 will clearly put the competition pressure back on the demand side,” Chia Woon Khien, emerging markets analyst at Edinburgh-based RBS, said in a note to clients e-mailed yesterday.
Malaysia is the world’s biggest market for Islamic bonds, known as sukuk, and may enable individuals to trade syariah-compliant debt on its bourse as part of a plan to attract new investors. — Bloomberg
Global sukuk sales rallied to US$20.2bil last year from US$14.1bil in 2008 after jumping to a record US$31bil in 2007 amid a surge in Arab oil wealth, according to data compiled by Bloomberg.
Sukuk are asset-based securities that pay a profit rate instead of interest, which is prohibited by syariah.
Malaysia is planning six sukuk sales this year, the same as last year, starting this month with 3½-year bonds and ending in November with a 10-year issue, according to a calendar published on Bank Negara website.
The calendar doesn’t provide details on the amount to be raised at each sale. — Bloomberg
EPF trims holding in AFG
Written by The Edge Financial Daily
Tuesday, 19 January 2010 00:31
KUALA LUMPUR: The Employees Provident Fund (EPF) is trimming its shareholding in ALLIANCE FINANCIAL GROUP BHD [] (AFG), which has been in the limelight lately due to the spat between its CEO Datuk Bridget Lai and its board.
Since last month, the pension fund has sold 21.41 million shares in AFG, reducing its stake in the company to 13.13% from some 14% previously.
Filings to Bursa Securities indicated that the shares, sold between Dec 10, 2009 and Jan 11, 2010, were transacted via the portfolio managers for the pension fund — CIMB-Principal Asset Management Bhd, Mayban Investment Management Sdn Bhd and Nomura Asset Management (M) Sdn Bhd.
Following the sale, the EPF now owns 203.33 million shares in AFG, whose single largest shareholder is the Singapore government investment arm Temasek Holdings Pte Ltd with 29.06%.
Yesterday, shares of AFG, which owns Alliance Bank Malaysia Bhd, fell one sen to close at RM2.51, giving it a market capitalisation of RM3.89 billion. The stock had dropped from a high of RM2.79 in late December to a low of RM2.41 last Monday since news of the internal probe into several of the banking group's top executives, including Lai, surfaced during the last week of 2009.
The counter had declined 7.4% so far this year, underperforming the FBM KLCI's 1.98% gain as the internal probe and the lack of disclosure on the incident have sparked concerns over the possible financial impact on AFG's earnings, if any, and its prospects going forward.
In a statement to the exchange on Jan 12, Alliance Bank said the internally driven investigation which was assisted by an independent external auditor, was a policy-prescribed procedure, and was expected to be finalised within two to three weeks.
Lai, who was appointed group CEO of Alliance Bank in September 2005, is currently on voluntary leave to facilitate investigations. She is effectively still the group chief executive of the bank. In the interim, Choo Joon Keong is the appointed relief officer in charge.
Alliance Bank said that while the investigations were being carried out, the bank was bound by legal and regulatory constraints and had to ensure that legitimacy of responses took precedence over disclosure and timeliness
