Old Mutual records $66m profit

By Paul Nyakazeya

Old Mutual Zimbabwe (Old Mutual) says its profit after tax declined by 35 percent to $66 million for the half year to June 30, 2018 from $101,8 million achieved during the same period last year due to the impact of lower fair value gains on listed equities during the period under review.

The impact was particularly on the insurance businesses and the holding company.

Operating profit, however, increased by 27 percent from $27 million to $34,4 million driven by growth in banking and asset management profits.

Old Mutual chairperson Johannes Gawaxab, yesterday said banking profit was driven by growth in both net interest income and net non-interest income while asset management was driven by higher fees on the back of growth in loans and advances.

“Net non-interest income grew by 32 percent to $19,8 million due to continued use of card-based and electronic banking platforms as alternatives to cash,” he said.

During the period under review the group said its primary focus was on building digital capabilities in order to enhance service delivery, improving operational efficiencies and exploring opportunities for growth.

The banking and lending business recorded a net surplus growth of 25 percent to $20,7 million up from $16,6 million last year.

This was mainly due to growth in net interest income by 20 percent on the back of growth in loans and advances.

Net non-interest income grew by 32 percent to $19,8 million due to continued use of card-based and electronic banking platforms as alternatives to cash.

Gross written premiums grew by eight percent from $95,3 million to $103 million in total for the life and short term insurance business due to a combination of improved client retention and new business that was underwritten.

“Operating profit for the life business was 12 percent lower than prior period due to the combined impact of significantly lower retail profit and higher wholesale claims during the half year to June 2018,” Gawaxab said.

Operating profit for the short term insurance business was also 44 percent lower than the comparable prior period, weighed down by significant fire related claims experienced in the first quarter of 2018 and increasing repair costs on the private vehicle book.

Funds under management for the asset management business were up by seven percent from $2,7 billion at the beginning of the financial period to $2,9 billion as at June 2018 largely due to growth in net client cash flows.

As a result of the growth in funds under management, fee income and operating profit for the asset management business increased by 33 percent and 91 percent to $11,5 million and $6,8 million respectively.

Operating and administration expenses declined by seven percent to $45,5 million from $48,7 million in the comparable prior period.

“The decline was mainly as a result of various cost containment measures being implemented.

“Total assets increased by 10 percent from $3,1 billion to $3,4 billion driven by growth in investments and securities and loans and advances,” he said.

Going forward, the group said the economic outlook looked “generally positive as evidenced by real sector volume growth” announced by several companies.

“Resultantly the aggregate earnings outlook is favourable. Zimbabwe, despite current economic difficulties, offers good prospects for sustainable growth over the medium to long term outlook,” Gawaxab said.

He said the group remained focused on building a strong business that would be best positioned to continue to deliver value to customers and shareholders into the future. — The Financial Gazette