RMH has focus on property in 2017

JSE-LISTED investment holding company RMB Holdings (RMH) said it would identify opportunities for its core and specialist portfolio in the year ahead to go with its newly-created property business in an effort to diversify its income streams.

RMB said during the presentation of its interim result for the six months to end December that it had extended its investments into the property sector in July last year with the acquisition of a 27.5 percent interest in Atterbury Property Holdings (Atterbury).

The purchase was later followed by a 34 percent interest in Propertuity, an urban renewal business in November. RMH also concluded a transaction to acquire 40 percent of Genesis Properties Three (Genesis), a mezzanine debt and equity funding business during the period.

The group said given that many of these deals were only concluded towards the end of the reporting period, earnings from RMH Property were relatively subdued, delivering R7 million of operating profit in the six month to end December.

“While still at an early stage, progress across our various property investments was pleasing, with strong development pipelines in place across the portfolio and a number of strategic initiatives under way,” said chief executive Herman Bosman.

RMH’s main interest is its 34 percent investment in separately listed FirstRand. In 2016 the group extended its investment strategy by entering the property portfolio. It said its property wing would continue to seek further transactions. It said it would maintain a measured approach in building the portfolio.

RMB reported an increase in net income by 16 percent to R4.11 billion, up from R3.54bn with profit for the period 14 percent higher at R3.99bn while headline earnings per share grew by 14 percent to 280.7 cents a share, up from 246.4c a share compared to 2015. The group declared a dividend of 153c a share, which was up by 8 percent.

RMH said its other investments performed well during the period. It said FirstRand, where it has a 34 percent stake, saw its net interest income increase 12 percent, driven by ongoing growth in advances (up 4 percent) and deposits (up 6 percent) while margins in many of the asset-generating businesses continued to come under pressure from higher term funding and liquidity costs.

Earnings and margins benefited more from the positive endowment effect. FNB increased pre-tax profits by 3 percent and produced a return on equity (ROE) of 38.5 percent.

The company said its African portfolio was, however, hampered by the poor performance in Zambia and Mozambique, which were the result of significant macroeconomic pressures. WesBank’s pre-tax profit increased by 9 percent and with a ROE of 19.9 percent.

Ashburton Investments, the asset management arm, saw assets under management having grown by 12 percent to R105bn. RMH said based on the FirstRand outlook and current macroeconomic conditions; the group expected economic growth to lift up in the second half of the year.

RMB shares dropped 0.57 percent on the JSE on Friday to close at R64.40.