Upbeat outlook for Takaful Malaysia on strong 3Q

PETALING JAYA: Syarikat Takaful Malaysia Keluarga Bhd’s (Takaful Malaysia) interim cash dividend of 18.5 sen a share comes as a surprise and beat analysts’ expectations with many now anticipating its payout rate returning to 40% of its earnings from 35%.

The takaful operator made the payout after reporting a net profit of RM115mil for the third quarter of this year (3Q25), lifting its earnings for the first nine months of this year (9M25) to RM293.8mil or earning per share (EPS) of 33.68 sen.

The strong performance was backed by its stronger investment income and family takaful products.

Kenanga Research noted Takaful Malaysia would likely see continued support for its credit-related family takaful products following its renewed 20-year bancatakaful arrangement with RHB Bank Bhd.

“The group had begun to see an increase in mortgage-based underwriting, thanks to the bank’s strong retail franchise. Takaful Malaysia looks towards broadening its exposure to non-motor general takaful products, currently 55% of its general takaful portfolio, to better manage its underwriting risks going forward,” the research house said in a report following the filing of Takaful Malaysia’s results with Bursa Malaysia on Tuesday.

Kenanga Research, however, warned the floods in parts of the country could see a rise in Takaful Malaysia’s retakaful provisions next year.

CIMB Research said Takaful Malaysia’s family takaful segment recorded gross contribution growth of 10% year-on-year (y-o-y) for 9M25, underpinned by a 6.6% y-o-y increase in credit takaful sales, with the bank channel contributing 67% of total takaful sales.

“In the general takaful segment, gross contributions grew 8% y-o-y in 9M25, underpinned primarily by motor takaful sales (5.5% y-o-y), which relies primarily on agents, which account for 58% of the general takaful delivery channel,” the research house said.

AmInvestment Bank Research (AmInvest Research) said Takaful Malaysia’s RM500mil Tier 2 subordinated sukuk issued on Sept 29, is expected to result in an increase in finance costs to the group.

AmInvest Research held its “buy” call on Takaful Malaysia with a revised target price of RM3.90 a share, adding its dividend yield for next year is decent at 5.7%.