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Old Mutual Zim posts $64m operating profit

Markets
OLD MUTUAL Zimbabwe has recorded a 7% growth in operating profit to $64 million for the year ended December 31, driven by growth in the insurance business.

OLD MUTUAL Zimbabwe has recorded a 7% growth in operating profit to $64 million for the year ended December 31, driven by growth in the insurance business.

The banking sector contributed 29% to the growth, insurance 56% and investment services 11% while the holding company contributed 4%.

Total revenue for the year stood at $454 million up from $286.5 million last year.

Investment income from the bank saw a 155% growth to $235 million.

“The main reason for this huge growth is the investment returns which were driven by the Zimbabwe Stock Exchange performance in 2013,” the group’s finance director Isiah Mashinya told analysts at the firm’s inaugural briefing.

Net premiums at $148 million were 17%higher than the previous year.

Expenses went up 23% to $332 million, which Mashinya attributed to the increase in net claims and benefits.

Profit after tax stood at $105 million including investment returns.

The group recorded a 10% growth in investment property, part of which was attributed to the Budiriro housing project and the new Borrowdale Office Park.

Total assets stood at $1,8 billion up from $1,5 billion in 2012.

Liabilities went up to $1,4 billion from $1,2 billion in 2012, bringing net asset of group to $340 million.

Basic earnings per share were 30 cents in 2013 compared to four cents in the prior year.

Life premiums grew by 3% to $133 million with the group maintaining its 53% market share in the insurance business.

The group’s subsidiary Cabs, the country’s largest mortgage lender which is now 25% indigenous-owned, maintained its A+ credit rating and implemented a new banking system.

The building society recorded a net interest income growth of 10% to $33 million.

Loans and advances grew by 18% to $322 million and deposits by 30% to $462 million. Non-performing loans were at 10,9% against industry average of 15%. Credits grew by 22% to $24 million against loan book growth of 14% to $322 million.

Deputy chief executive, Zomunoda Chizura said Old Mutual Zimbabwe had no plans to list as yet on the local bourse, although its parent company, Old Mutual plc listed in 1999.

“It goes in stages, the first stage is having an OTC (over the counter) market which we now have. The directors and shareholders of Old Mutual Zimbabwe might decide to list one day,” he said.

The group started over the counter trading in October last year, and the process is managed by its securities arm.

He said the group feared losing its indigenisation status once it listed.

“It’s one of the challenges that we face in going into a fully listed space but I am sure it’s a space we will eventually go to in the fullness of time,” he said.

“In terms of disclosure, we believe that our disclosure going forward is going to be as good as any listed company – openness and governance we will abide by as if we are listed.”

Going forward, he said the operating environment would continue to be difficult characterised by low or negative inflation and tight liquidity.

He said the company will continue to develop products suited of the environment through its housing project and mortgage finance as well as defending and growing its market share.

The plc holds 78,5% of the issued share capital while indigenous groups hold the remainder.

– The Source