Home » Business » Insurance, Banking Units Lift Old Mutual Profits

Insurance and banking units contributed the most to the near 2 000 percent bottom-line uplift of Old Mutual Zimbabwe in the year to December 2013. The indigenised unit of Old Mutual plc, achieved a net profit of $105,6 million from $5,3 million, an increase of 1 982 percent mainly because the previous year results had been impacted by the indigenisation initiative which resulted in a $52 million non-recurring knock. The insurance and banking units contributed 85 percent of profit.

Deputy chief executive Mr Zom Chizura told analysts on Wednesday at the group’s maiden briefing that in spite of the difficult environment currently prevailing, the group had managed to leverage on group synergies by increasing its market presence and making significant improvements in its digital distribution and marketing.

Total revenue amounted to $454,6 million from $286,5 million in 2012, a 59 percent increase. Finance director Mr Isiah Mashinya noted that the main driver of the growth had been investment income at $235,2 million up 155 percent from last year.

“Investment income was mainly driven by the 2013 Zimbabwe Stock Exchange rally,” said Mr Mashinya.

Other contributors to the top line included net earned premiums at $148,8 million, banking interest and similar income at $32,7 million and fee income, commissions and income from service contracts at $37,4 million.

Expenses grew at a much slower pace than revenue at $332,9 million, an increase of 23 percent. Net claims and benefits rose 62 percent to $240,5 million.

In terms of the operating units, Mr Chizura said Life insurance remained dominant in its market with 53 percent market share.

Life premiums grew 3 percent to $133 million.

The unit’s Guaranteed Fund declared a bonus of 17,5 percent from 7 percent in the prior year.

The short-term insurer RM was now top of its market with a share of 13,5 percent on gross written premiums.

At CABS, the A+ global credit rating had been maintained while service was widened following the implementation of a new banking system.

Mr Chizura said distribution models had been expanded with increased ATMs, POS and additional services on its mobile banking platform.

Credit lines grew 22 percent to $24 million while the loan book was up 14 percent to $322 million.

Non-performing loans were at 103 percent against the industry average of 15,9 percent.

Mr Chizura emphasised that the $10 million Youth Fund was not part of the NPLs as this was secured by the 2,5 percent shareholding certificated the group had sold following its indigenisation.

Mr Chizura said $2 million of the loans were bad.

The group’s 25 percent indigenised shares had started trading over the counter in the $1,40 range and had gained around 20 percent since trading began in October last year.

The 25 percent is listed under Class B shares.

Mr Chizura said because they fear that the shares would lose its indigenous status once listed on the foreign-driven ZSE, the group did not have plans to go list them.

Source : The Herald

Archives