Photo: A Tabung Haji office in Johor Bahru, Malaysia, on July 22, 2019. Shutterstock

Islamic Finance

Malaysia’s Tabung Haji posts 47% jump in net profit for first half 2020

Malaysia’s Lembaga Tabung Haji posted 1.25 billion ringgit ($293 million) in net profit for the first six months of this year, a rise of 47% compared to 849.66 million ringgit for the same period in 2019.

Tabung Haji, which helps Malaysians save for the hajj, said in a statement on Thursday (Jul 9) its investment income reached 1.55 billion ringgit, 65% of which came from fixed income investments.

Property investments generated an income of 204.57 million ringgit, Islamic money market investments contributed 187.13 million ringgit and equity investments 150.27 million ringgit.

The Islamic financial institution said it is preparing for “a more challenging hajj management next year, following the postponement” of this year’s hajj. “This includes addressing new challenges such as the provision of services that takes into account the COVID-19 pandemic,” it said.

“Operationally, Tabung Haji needs to be more efficient by improving its services and reducing costs,” added group managing director and CEO Nik Mohd Hasyudeen Yusoff.

The company said that moving forward digital services will be the main focus as the majority of depositors are tech-savvy.

Total deposits from around 9 million would-be pilgrim savers reached 73.86 billion ringgit from 69.42 billion ringgit at the end of 2019. Tabung Haji said it registered over 123,000 new savings account openings in the first half of the year.

Tabung Haji was in turmoil for the last couple of years. It recently in February named three new heads to strengthen its financial and investment business, including a new chief investment officer.

A PwC review of its financial position conducted after Malaysia’s change of government in May 2018 showed, among other matters, that the company’s management had manipulated the profitability of the fund, and did not prudently record some 549 million ringgit in impairment losses on investments.

The government stepped in with a rescue package that largely involved buying Tabung Haji assets via sukuk and cash. In August 2019, Tabung Haji’s then-outgoing CEO Zukri Samat, who was appointed in July 2018 to turn around the business, said the worst was over for the company.

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