EPF investment income rises 29% to RM12.32b in third quarter

EPF chief executive officer Datuk Shahril Ridza Ridzuan said the EPF reported a 101.27% increase in the usage of i-Akaun to 3.33 million in Q2 2015 from 1.65 million a year ago.

KUALA LUMPUR: The Employees Provident Fund (EPF)'s investment income surged 29.21% to RM12.32 billion in the third quarter ended Sept 30, 2016, from RM9.54 billion a year earlier.

Investment assets increased by 4.09%, or RM27.98 billion, to RM712.50 billion from RM684.52 billion as at Dec 31, 2015.

Chief executive officer Datuk Shahril Ridza Ridzuan said the improved year-on-year performance in the third quarter was accentuated by a low base.

"Our overseas investments continued to enhance returns during the quarter, while non-cash impairments also recorded a significant reduction from last year," he said in a statement on Monday.

During the quarter, non-cash impairments significantly improved to RM349.59 million, from RM1.02 billion a year before.

Equities, which made up 41.24% of total investment assets, contributed RM7.02 billion, representing 56.96% of total investment income for the quarter. This was 49.02% higher when contrasted to the RM4.71 billion recorded in the corresponding quarter of 2015.

The higher income in the third quarter was attributed to an improvement in equity prices, mainly in the North Asian and developed markets, which provided opportunities for the EPF to realise a higher trading income, Shahril said.

As at Sept 2016, 49.76% of EPF's investment assets were in fixed income instruments.

fixed income investment generated RM4.52 billion, equivalent to 36.65% of the quarterly investment income.

Income from Malaysian Government Securities (MGS) and equivalent rose 7.21% to RM1.95 billion from RM1.82 billion a year earlier, while loans and bonds generated an investment income of RM2.56 billion, compared with RM2.54 billion previously.

Going forward, Shahril said EPF's cost for overseas investments will increase as it will be at higher foreign exchange rates.

"The low interest rate environment will also continue to reduce the return from our fixed income investment, as maturing higher yielding bonds would be reinvested at the prevailing low interest rate.

"Given the decline in investment income in the first half of the year and the uncertainties expected to remain for the rest of the financial year, it would be a challenge for the EPF to sustain previous years' returns," he added. - Bernama