HARARE - Listed financial services group First Mutual Holdings Limited (FMHL)’s operating profit surged by 1 090 percent to over $1 million in the first four months to April 2015 due to cost cutting measures and rationalisation of branches.
Douglas Hoto, FMHL’s chief executive said the positive growth trajectory came on the backdrop of declining economic conditions in the country.
“So when you look at the total expenses and the total net income, we have an operating profit of just over $1 million in the first four months compared to the nearly break-even operating position ($89 000),” Hoto told stakeholders at an annual general meeting on Tuesday.
This comes as the group’s gross premium written grew by three percent to $39,2 million from $38,2 million recorded in prior comparable period while total expenses decreased by one percent to $37,3 million from $37,7 million.
“You may recall that early this year when we announced our results (financial for 2014), we said we had taken a number of measures to reduce management expenses,” he said.
Hoto noted that claims increased by eight percent to $22,6 million from $21 million in prior period.
“What is interesting to note is that claims are increasing at a decreasing rate. Last year we had an increase of claims from the prior year of about 33 percent compared to this year’s eight percent. This means that claims are being managed in the right direction but they don’t just take off immediately,” he said.
He added that in the period under review they registered a reduction of nearly $700 000 due to cost-cutting initiatives. Net premium written remained almost static at $35,7 million from $35,4 million recorded in same period last year, reflecting a depressed operating environment.
“A large part of our insurance business is short- term and reinsurance businesses, they write a lot of fire and engineering businesses,” he said.
Rental income slumped by five percent to $2,5 million from $2,6 million reflecting the economic difficulties faced by tenants.
“Occupancy levels of buildings in the central business district (CBD) are quite low…however, this has been mitigated by performance from other sectors such as retail and office park sectors,” he said.