KUALA LUMPUR: Permodalan Nasional Bhd (PNB) has distributed a record high of RM15bil in dividends in the financial year ended Dec 31, 2018 (FY2018) despite a slight drop of 3.96% in net income to RM17.01bil from 2017.
Having achieved this result on the back of a highly uncertain year, PNB’s strategy moving forward is to increase its percentage of global investments across all asset classes.
The RM15bil is by far, the largest payout since the inception of the government-linked investment company, which brings its cumulative dividends paid out since inception to RM187bil.
The dividends paid out last year was 2.74% higher than RM14.6bil in 2017.
PNB has declared income distributions of 6 sen per unit for Amanah Saham Bumiputera 2 (ASB 2) and 5.5 sen for Amanah Saham Malaysia (ASM).
This is slightly lower than the quantum last year at 6.75 sen for ASB 2 and 6.25 sen for ASM.The total payout for ASB 2 will be RM610.7mil to 404,706 unit holders who own 10.4 billion units while ASM will distribute a total payout of RM1.1bil to 541,758 unit holders with 19.5 billion units.
ASB 2 and ASM recorded net realised incomes of RM500mil and RM800mil respectively.
As for PNB’s three variable price funds - ASN Equity 3, ASN Imbang 2 and ASN Sara 1 - the income distributions are 4.1 sen, 4.2 sen and 5 sen per unit respectively.
The total income distribution for these three funds amounts to RM236.1mil, benefitting 220,188 unit holders.
PNB has manoeuvred through a challenging economic environment in 2018 to achieve a 6.9% increase in assets under management (AUM) to RM298.5bil from RM279.2bil the previous year.
It also saw an increase in units in circulation (UIC) by 7.9% from 219.3 billion to 236.6 billion, from 13.8 million accounts across all of PNB’s 14 funds.
Amidst the backdrop of global uncertainties, PNB chairman Tan Sri Dr Zeti Akhtar Aziz said PNB has demonstrated its resilience with its financial performance.
“The increase in assets reflects the trust the unit holders have in PNB and that the funds have continued to deliver competitive returns to unit holders.
“There has been greater diversification of our portfolio of assets and we intend to intensify these efforts. More cash has now been reallocated to fixed income as well as global financial assets,” she told a briefing on PNB’s FY2018 performance review and annual report release.
Zeti said the macroeconomic condition in 2018 became challenging as global economic growth moderated in most economies except for the United States.
Among other factors that influenced market conditions were the intensifying US and China trade tensions, tightening interest rates by the Federal Reserve, the volatility of energy and commodity prices and the downward trend of crude oil and crude palm oil prices.
The ringgit also depreciated in 2018 following an outflow of foreign funds from most emerging markets but it was a lesser extent for Malaysia than other regional currencies.
The FBM KLCI which was also down by 5.9%, was also to a lesser extent than most of the other regional markets.
“The environment remains challenging for 2019 as uncertainties in the global economy and the international financial system continue to be down on growth in many parts of the world.
“For Malaysia, the GDP growth is predicted to be sustained at 4.5% to 4.9%, with the ringgit expected to remain stable for the year, underpinned by resilient performance of the domestic sector.
“I believe our forecast is just very slightly, more optimistic and we hold to this forecast. As we reach the conclusion of the first quarter, we can observe that although global markets have rebounded, the domestic market has yet to recover,” she said.
Given the highly volatile and uncertain market conditions, Zeti said PNB’s strategy will be to push for greater diversification.
The ongoing portfolio diversification has seen a reduction of cash and money market from 18.6% to 17.4% while investment in fixed income went up from 5.8% to 6.5%.
International diversification is also gathering pace, going up to 3.3% from 2.4%. The remaining 96.7% are domestic investments.
In terms of geographical diversification, Zeti said PNB will look at both developed countries such as US, United Kingdom, Australia, Japan, France and Germany and other emerging economies and emerging economies in Europe and Asia.
“We’re not only going into the global financial markets but also within our country. For example, our bond market is one of the most developed in Asia in terms of the number of instruments raised, issued, the term and maturity structure.
“We will look at all these options to try and enhance our return and also mitigate some of our risks in the financial markets,” she said.
PNB also has around 6.6% invested in the domestic bond market and will look into other asset classes including REITs domestically.
PNB’s diversification in emerging economies will be in a very gradual manner as it needs time to build up expertise.
“We’re not going to rush into it. Timing and entry level is very important. Our investment time horizon is for the medium and longer term. The market will respond to a wide range of factors including short term factors that trigger volatility.
“We will focus on the fundamentals and try to avoid being subsumed in the noise that happens around us,” she said, and stressed that PNB will be a responsible investor, and will not contribute to any disruptive movement in the domestic market, its strategic investments or any markets it invests in.
President and group chief executive Datuk Abdul Rahman Ahmad said PNB has identified six global fund managers for its overseas investments.
The deployment of the investments would take around three to three and a half years and PNB will begin some of its deployment by the end of this year.
On the progress update of PNB’s Strategic Plan 2017-2022, it will be undertaking a mid-term review of the plan, focussing on key areas of strategic asset allocation and optimal liquidity management, enterprise risk management and organisational transformation.
Meanwhile, Zeti called for investors to understand the risks in the financial market place as PNB’s income distribution depended on investment performance, which in turn, depends on the investment climate it is operating in.
“As the custodian to the wealth of millions of Malaysians, we will do our best to continue navigating these uncertain times to deliver sustainable returns to our unit holders.
“We will nevertheless strive to outperform the market through our robust investment process and stringent investment criteria,” Zeti said.