Old Mutual records $219m profit

Published: 27 March 2018

Integrated financial services group, Old Mutual Zimbabwe Limited (OM) said its profit after tax went up 139 percent to $219 million in the full year to December 31, 2017 from $91,8 million due to improved business performance across all the company's units.

Old Mutual chairperson Johannes Gawaxab yesterday said the group's adjusted operating profit - which comprises operating profit plus a normalised investment return on shareholder funds - was up 25 percent from $76,1 million to $95,5 million.

"This was due to higher life, banking asset management profits and increased long-term investment returns on the back of a higher asset base," he said in a statement accompanying the group's financials for the year under review.

The banking business recorded a net surplus growth of seven percent from $39,2 million to $42,1 million mostly driven by non-interest income as well as an improved non-performing loan ratio.

"Interest income was one percent below last year with the impact of interest rate caps mitigated by a 15 percent growth in loans and advances to $668,8 million from $583,3 million as well as a lower cost of deposits.

At $194,8 million, gross premiums grew five percent for the life and short term insurance businesses due to a combination of improved client retention and new business written.

"The short term insurance business achieved an underwriting margin of 13 percent compared to 18 percent in 2016 weighed down by weather related claims experienced in the first quarter of 2017 and increasing repair costs on the private motor vehicle book in the second half of the year," the OM boss said.

OM Funds under Management (FUM) at the asset management business growing 50 percent from $1,8 billion to $2,7 billion.

"This was largely due to a combination of growth in net client cash flows generated and gains on ZSE-listed equities.

"As a result of growth in the FUM, fee income and profit before tax for the asset management business increased by 28 percent and 64 percent respectively to $20,6 million and $10,7 million respectively," Gawaxab said.

Total assets were up 45 percent to $3,1 billion from $2,2 billion.

"This was driven by growth in investments and securities, loans and advances and cash and cash equivalents," said the OM boss.

In the year under review, the group also managed to launch Old Mutual Finance and complete Kupinga Hydro Station which is now supplying 1,6 Megawatts of power into the national grid.

- The Financial Gazette

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