KARACHI, April 29: The Employees Old-Age Benefits Institution (EOBI) has made a fabulous growth of 600 per cent in equity income on realizing Rs717.193 million during three quarters (July-March) of current fiscal as compared to Rs103.055 million made in the corresponding period last year, official sources said.
The achievements made in equity investment by the Institution are so incredible and outstanding that it has recorded a growth of 1,073pc in dividend income on realizing Rs91.351 million as against only Rs7.786 million recorded last year.
Similarly, the income out of capital gain realized on equity was also remarkable with a growth of 133.67 per cent at Rs222.612 million as against Rs95.269 million achieved in the corresponding period last year.
On earning higher dividend income and capital gains, sources said, it was also possible for the EOBI to record 23 per cent growth in over all investment income at Rs7.043 billion from Rs5.730 billion achieved in the same time last year.
Therefore, return on investment in equity portfolios translates into 46 per cent, whereas over all return improved from 18 per cent to 38 per cent during the period under review.
Through diversification of portfolios the EOBI has not only managed to off-set the negative impact of dwindling interest rates on National Saving Schemes (NSS) and other government securities but has also succeeded in earning better profits and improving its income, the sources said.
The chairman, EOBI, Muhammad Shafi Malik told Dawn that the reduced interest rates on NCC left no choice for the institution except to look for such investment opportunities which could ensure better yield and hold strong fundamentals.
He said that under a well defined portfolios diversification plan the EOBI has reduced its holding in government securities by 3.40 per cent to 91.60 per cent. Similarly, he said holding in Certificates of Investment (COIs) and Certificate of Deposit (CODs) has been cut to halve to 2.50 per cent.
On the other hand, Shafi Malik said investment in Term Finance Certificates (TFCs) made this fiscal stands at 1.20 per cent and in Equities at 4.70 per cent of the EOBI’s total investment portfolio.
In the past, he said, the EOBI had been entirely investing in government debt (securities), but gradual cut in interest rates of National Saving Schemes (NSS) and PIBs compel the new management to look for new avenues of investment.
In order to mitigate risk in equity investment the institution, besides taking a consultancy role from a number of brokerage houses, has also established an in-house investment division, looked after by highly qualified and professional as its director general.
The head of EOBI’s investment division Farooq Awan told Dawn that under a firmly laid down investment parameters, the EOBI investment in equities will be on long term basis and it will be in those stocks which have high yield and excellent track record of giving dividends,
Consequently, equity investment will be in blue chips of those companies who have strong fundamentals. Each package of investment proposed by the institution’s division is approved by its board, he added.
He further said that investment from EOBI and other institutions give stability to the capital market, which is otherwise dominated by jobbers and speculators. He urged the government and State Bank of Pakistan to launch long-term bonds and their maturity should not be less than 15 to 20 years.
He said presently maximum maturity period for such investment instruments was not more than 10 years which is not sufficient for long term economic plans and development activities.
