EPF investment income surged despite some loses in several stocks
The Employees Provident Fund (EPF) surpassed the Rs. 3 trillion value mark by the end of 2021, while earning a total investment income of Rs. 342.2 billion in 2021 compared to Rs. 285.4 billion in 2020, according to the Central Bank of Sri Lanka’s (CBSL’s) 2021 annual report, Central Bank reported.
However the Auditor General’s Department revealed that EPF, the largest social security scheme in Sri Lanka, has suffered massive losses due to the investments made in listed and unlisted companies.
According to the recent report of the Government Auditor the fund has invested Rs. 5,000 million in Grand Hyatt Colombo, and it has not made any profits to date.
The EPF lost Rs. 205.49 million by December 31, 2021, after the licence of The Finance Company was cancelled by the Central Bank of Sri Lanka (CBSL).
The report revealed that a sum of Rs. 5,000 million or 53% from investing shares in unlisted companies was invested in the construction of Canwill Holdings Hotel Complex in 2013.
Meanwhile, the construction work of Grand Hyatt Colombo project related to the erection of Canwill Holdings Hotel Complex had recommenced in 2020.
However, the construction work of the hotel complex had not been completed by December 27, 2021, and although 8 years had passed, the EPF has not received any benefit from the investment, the audit report pointed out further
Accordingly, the total value of the fund increased by Rs. 341.8 billion to Rs. 3,166.1 billion by the end of 2021, from Rs. 2,824.3 billion reported in 2020, while the active number of member accounts decreased to 2.3 million from 2.6 million in 2020.
The EPF now accounts for 11.8% of total assets in the financial system of the country.“This growth was an outcome of a combined effect of the net contributions of the members (amount of contributions received, minus refunds paid) and the income generated through investments of the fund,” the CBSL report said.
An investment income of Rs. 342.2 billion was recorded in 2021, indicating an increase of 19.9% compared to the previous year. Interest income continued to be the major source of income for the EPF, which grew by 5.9% to Rs. 293.7 billion in 2021, from Rs. 277.4 billion in 2020.
Also, dividend income increased by 124.0% to Rs. 6.7 billion in 2021, compared to Rs. 3.0 billion in 2020.
The value of the stock portfolio of Sri Lanka’s Employees Provident Fund has risen to 112 billion rupees, showing unrealized gains of 28 billion rupees, the central bank which manages the assets said.
About 3 percent of its 3,343 billion US dollars of assets were invested in listed and unlisted stocks.
By December the market value of EPF’s stock portfolio had risen to 112 billion rupees, compared to a cost of 84 billion rupees.
EPF had also earned 4.7 billion rupees in 2021 from realized capital gains, scrip issues and cash dividends.
In the past three years, on an unlisted equity investment portfolio of 9.6 billion US dollars, dividends were 2.5 billion US dollars from 2019 to 2021
By September among the big gainers were LOLC Holdings, carried at a cost of 1.6 billion rupees and valued at 9.4 billion, Royal Ceramics bought at 1.6 billion rupees and 7.0 billion rupees, Vallibel One bought at 2.7 billion and valued at 6.6 billion US dollars.
At the time the value of the portfolio was only 91 billion rupees.Among unlisted stocks owned by the EPF is West Coast Power (Yugadanavi), which has been progressively paying down its loans.