Photo by Shahrill Basri/The Edge

KUALA LUMPUR (June 25): Permodalan Nasional Bhd’s (PNB) said on Tuesday that its net income grew by 26% last year as the country’s largest fund manager raised investments in fixed income, real estate, private markets and foreign assets.

Net income totaled RM13.04 billion for the financial year ended Dec 31, 2023 (FY2023) compared to RM10.38 billion in FY2022. Asset under management (AUM), however, declined 1.3% to below RM337 billion, according to PNB’s latest annual report released on Tuesday.

“Despite the challenging market conditions of 2023, we delivered commendable returns,” said PNB chairman Raja Tan Sri Arshad Raja Tun Uda. “This achievement is largely attributed to our strategic asset allocation and diversification efforts across various asset classes.”

Looking forward, PNB said it is optimistic about both developed and domestic equity markets, supported by robust consumer spending and substantial capital investments in the technology sector, which are anticipated to drive increased earnings growth and valuations.

“We also hold a positive outlook for both global and domestic fixed income markets, as peak global interest rates create more favourable entry points for increasing our fixed income allocation,” PNB said.

Equities made up 77.06% of net asset value followed by fixed income at 12.41% and others at 10.53% in 2023.

On the decline in AUM, PNB’s former president and chief executive Ahmad Zulqarnain Onn said in the report that there were higher-than-normal redemptions from cost of living pressures and higher interest rates.

Units in circulation declined to 275.3 billion units in 2023 from the 282.9 billion units in 2022 as a result of some unitholders redeeming a portion of their investments to address immediate financial needs,” said Ahmad Zulqarnain, who resigned in February this year.

He is at the helm of the Employees Provident Fund, succeeding Datuk Seri Amir Hamzah Azizan following his appointment as the second finance minister.

Still, the number of accounts grew from 15.2 million to 15.7 million due to the increase in individual investment limits for the ASB and ASB 2 funds and the expansion of the ASM fund on April 1, 2023, said Ahmad Zulqarnain.

In FY2023, PNB sold Malaysian Industrial Development Finance Bhd to Malaysia Building Society Bhd (KL:MBSB) via a RM1.01 billion share swap. PNB also completed the merger of UMW Holdings Bhd with Sime Darby Bhd (KL:SIME) last year.

Sime Darby also divested Ramsay Sime Darby Health Care Sdn Bhd to Columbia Asia Healthcare Sdn Bhd for RM5.7 billion to focus on its core business of automotive and industrial equipment.

“Additionally, our collaboration with the EPF and the Retirement Fund Inc (KWAP) in the RM2 billion sale and leaseback transaction with Osram Opto Semiconductors Sdn Bhd opened avenues for high-quality industrial real estate investments in Malaysia,” said Ahmad Zulqarnain.

In the real estate market, PNB flagged “persistent challenges” and braced for the impact of a higher-for-longer interest rate environment and heightened geopolitical tensions, which pose significant risks to its international investments.

Still, growth opportunities are emerging in the industrial and logistics sectors, PNB said.

“Our strategy includes enhancing our real estate portfolio through effective capital recycling activities and making strides in key development projects,” PNB said. “We are poised to identify fresh investment avenues, drive asset enhancement initiatives forward, and integrate ESG principles into both our existing and forthcoming assets.”