First Mutual takes cautious approach in managing investments
FIRST Mutual Holdings says it will maintain a cautious approach in managing its investments portfolio with core focus on value preservation, the chairman Mr Oliver Mtasa has said.
In unaudited interim financial results for the six months ended June 30, 2016, he said the group’s renewed focus has been placed on the risk management framework across the company driven by vulnerabilities in key sectors of the economy to protect stakeholder value.
“The macro-economic environment is projected to remain tough as evidenced by the adverse balance of trade position, deflationary pressures and the debt overhang.
“However, the board is determined to preserve and create value for the stakeholders through further process efficiencies, robust cost management and continued innovation.
“Renewed focus has been placed on the risk management framework across the group in view of vulnerabilities in key sectors of the economy to protect stakeholder value,” said Mr Mtasa.
He said fair value gains were expected to come under pressure owing to bearish trends on the Zimbabwe Stock Exchange.
This, he said, was a reflection of the general trends in the economy as well as downward revision of investment property values.
“Furthermore, money market interest rates are expected to decline as banks move to contain cost of funds in the wake of reduced lending and decline in fee and transactional income.
“The fixed interest market is expected to partially counter the pressure on investment income as interest rates have remained relatively high,” said Mr Mtasa.
He said operating profit, before the outturn on the investment portfolio, improved to $4,9 million compared to prior period profit of $1,9 million largely due to lower claims in the insurance business.
During the period under review, the group incurred a net investment loss of $300 000 compared to net investment losses of $2,7 million last year mainly due to the decrease in fair value losses quoted on equities relative to prior, increased interest income from money market investments and held to maturity investments.
“The group achieved an overall profit of $2,6 million for the period compared to $400 000 in the previous period,” he said — @okazunga.
First Mutual chairman Mr Oliver Mtasa