PNB’s net income falls 3% on weak equity market

> Asset under management however grew 4.7% to RM266.5 billion

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) saw its net income drop 3% to RM15.28 billion in 2016, dragged down by the weak equity market performance. It made RM15.75 billion in 2015. The net income which constitutes proprietary and collective unit funds, showed a dip due to the drop in return of assets (ROA) from 6.4% to 5.94%.

In spite of this, it chartered growth in its asset under management (AUM), which grew by 4.7% to RM266.5 billion in 2016 due to the 10% growth achieved in proprietary assets, which stood at RM40 billion.

PNB’s Group chairman Tan Sri Wahid Omar also announced a total dividend payout of RM13.9 billion for last year, translating into a total average weighted dividends including bonus for PNB’s fixed-price funds of 6.87 sen.

All 12 funds under its wing including Amanah Saham Malaysia (ASM) and Amanah Saham Bumiputera 2 (ASB2) maintained competitive returns, with RM1 billion announced as payouts for ASM and RM 384.7 million for ASB2.

While public equity constituted 69% of the total gross income, despite falling a percentage point to 7%, PNB’s private investments showed improvement by 10%.

Its cash assets however dropped to 20% from 23% due to the central bank’s Overnight Policy Rate (OPR), which reduced the interest rate on the cash deposits and money market. Real property was affected by the exchange rate as five of its properties are located in the United Kingdom and Australia.

Speaking at a media briefing on PNB Annual Review 2016 here, Abdul Wahid said he is cautiously optimistic on the economic and financial markets performance in 2017.

He opined that Malaysia’s favourable economic outlook, along with a recovery in exports and oil prices as well as sustained domestic demand, could spur sentiments for the local stock market this year, despite the consistent decline of FBM KLCI, which went down by 3% for the third year in a row.

“A number of initiatives we have driven ourselves, has resulted in very positive sentiments in the nation’s stock market where we have seen FBM KLCI increasing by 104 points or 6.3% up to last Friday,” he said.

PNB is one of three shareholders of Valuecap, a proprietary investments manager, entrusted with the role to inject up to RM20 billion into the local stock market under Budget 2016.

Abdul Wahid said the year began with a positive note, supported by fundamentals and improvements in the Malaysian corporates, which he said will underpin future performance of the stock market.

He added that the focus this year would be on enhancing the value of the strategic and core companies which did not perform well last year.

On another note, he said the demergers of PNB’s strategic companies Sime Darby Bhd and UMW Holdings Bhd, could excite the market and support growth of corporate Malaysia.

“The focus is always on the fundamentals where we want to grow their profits and earnings so that it reflects on the dividend payouts,” said Abdul Wahid on the de-merger exercise.

At the moment, PNB has refrained from listing its property development arm, I&P Group, due to unfavourable market conditions.