Kuala lumpur: Lembaga Tabung Haji (TH) has described the recovery and restructuring plan implemented in 2018 as a necessary financial bailout to prevent the institution from becoming insolvent, saying that TH would have otherwise faced the risk of a massive deposit withdrawal that could trigger a financial market crisis and undermine the country's economic stability.
According to BERNAMA News Agency, the government's bailout enabled TH to execute its recovery plan in 2018, thereby safeguarding depositors' savings and ensuring the institution's financial sustainability. TH highlighted that the profit distribution, given the asset-liability gap exceeding RM10 billion as at end-2018, had the potential to trigger a run on deposits and force Tabung Haji to sell its assets at distressed prices to meet large and uncontrollable cash withdrawal requests from depositors.
TH stated that the recovery plan successfully addressed investment losses amounting to RM12.6 billion, allowing the institution to return to a stronger and more sustainable financial footing. The profit distribution rate increased from 1.25 per cent in 2018 to 3.5 per cent in 2025, while also rebuilding its reserves for a more stable future.
The government and TH faced four options for implementing a recovery and restructuring plan within the tight timeframe leading up to the end of 2018. They ultimately chose to sell underperforming and problematic assets to the government at a premium value to close the gap between assets and liabilities, thereby ensuring TH remained solvent.
"A government-owned special purpose vehicle (SPV), Urusharta Jamaah Sdn Bhd (UJSB), purchased assets valued at RM9.7 billion for a total of RM19.9 billion to cover the existing deficit. This enabled a profit distribution for the 2018 financial year to be declared," TH explained. The transaction was financed through two sukuk series issued by UJSB, backed by a government letter of support, with a profit rate of 4.05 per cent and 4.10 per cent per annum.
Under the leadership of the chairman, the board of directors, and a professional management team, TH returned to a stronger and more sustainable footing through the implementation of strategic plans, reforms, and improved governance, all without government interference. TH's declared profit distribution rates improved and stabilised, with returns rising from 1.25 per cent in 2018 to 3.25 per cent in 2024 and 3.50 per cent in 2025.
The institution noted that these profit distributions were determined after accounting for RM2.6 billion in impairment losses on problematic assets that could not be transferred to UJSB at the end of 2018 due to specific reasons. "TH's financial position is now stronger, and it has begun rebuilding reserves to ensure a more stable future," TH said.
TH remains committed to safeguarding depositors' interests, strengthening public trust, and ensuring the institution continues to operate with integrity and accountability.