KUALA LUMPUR: Tabung Haji’s (TH) asset quality and its profit source will be among the key metrics in assessing the institution’s financial strength, aside from the hibah (profit) distribution, according to an economist.
Associate Prof Dr Abdul Rahim Ridzuan, a lecturer at Universiti Teknologi Mara’s Faculty of Business and Management, said focus should also be on the sources of TH’s earnings.
The focus should be specifically whether they are backed by strong asset performance or driven by temporary factors.
“Don’t just ask, ‘how much is the hibah?’ but also ask, ‘Where does the profit come from, how sustainable is it, and how strong are the underlying assets?’” he told Bernama.
He said a healthy profit distribution rate is undoubtedly important.
This is because it directly benefits depositors.
He added that strong earnings alone are insufficient to indicate that an institution has fully recovered.
Instead, Abdul Rahim said any assessment of TH’s financial strength should also take into account the quality and performance of its assets.
Apart from the quality and performance, it must also take into account the stability of its income, the sustainability of its long-term earnings, and the transparency of its financial reporting and investment disclosures.
These would allow depositors to evaluate the fundamentals underpinning TH’s financial performance, rather than focusing solely on the hibah distributed in a particular year.
