Old Mutual Zim posts $13m profit

HARARE - Old Mutual Zimbabwe (OMZ) posted a $13,3 million profit for the year to December 31, 2015 from $10,9 million on the back of a strong performance by the group’s life business.

Old Mutual Zimbabwe managing director, Jonas Mushosho, told analysts in the capital on Wednesday that group revenue had recorded a six percent growth to $203,8 million.

“Of this amount, at least 76 percent came from the life business as well as the banking unit Central African Building Society (CABS),” he said.

The group’s profit after adjusting for short-term fluctuations in the equity markets amounted to $57,3 million, slightly lower than the $58 million recorded in the prior year.

Cabs — whose assets in the year under review surpassed the $1 billion mark — contributed $100,8 million to total revenue as net earned premiums from the insurance business amounted to $171,2 million, up from $160,5 million in the prior comparative year.

The Cabs boss said, Cabs’ performance had been buoyed by a 27 percent growth in loans and advances to $563,1 million.

But, the asset management business recorded a 25 percent decrease in investment income to $126,2 million weighing down group revenue.

“The negative outturn of the asset management business was on the back of negative returns that were experienced on the Zimbabwe Stock Exchange, where the main industrials index was down 29,44 percent in 2015,” Mushosho said.

OMZ financial director Isaiah Mashinya said the poor performance of the stock market was on the back of depressed company earnings and negative investor sentiment that continued to weigh down equity returns.

According to Mushosho, contribution from investment properties was also subdued, with rental income slumping from $13,4 million to $10,4 million.

“The performance of investment properties was weighed down by downward reviews on rentals and increased vacancy levels. As a result, the valuation of investment properties was reduced to $408,4 million from $439,9 million to reflect the subdued rental yields,” he said.

Performance of the banking unit as well as the life business, however, carried the day with the group closing the period with an adjusted operating profit of $76 million up five percent from prior period.

Basic earnings per share amounted to 3,71 cents, up from 3,09 cents prior year.

Going forward, focus of the group will be on defending and extending the core business as well as driving financial inclusion within the informal market, believed to employ about 94 percent of the working population.

This comes as OMZ parent company Old Mutual Plc recently announced it was going to split up its four main businesses following a strategic review announced last year which led to the appointment of former Standard Bank executive Bruce Hemphill as chief executive.

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