Old Mutual profit surges to $11,2bn
OLD Mutual Zimbabwe posted an inflation adjusted profit before tax of $11,2 billion but has warned that the relative stability being experienced in the economy remains under threat from policy weaknesses and the impact of the COVID-19 pandemic.
In its financial statement for the first six months to June 30, 2021, Old Mutual chief executive Sam Matsekete said the profit before tax of $11,2 billion was an increase from $8,9 billion achieved in the same period last year.
“The group registered a commendable set of financial results achieving an inflation adjusted profit before tax of $11,2 billion up from $8,9 billion achieved in the same period last year,” Matsekete said. “Inflation adjusted total assets increased by 23% from $114,6 billion as at December 31 2020 to $141,3 billion as at 30 June 2021 with nominal growth of 51% higher than inflation of the year to 30 June 2021 of 20,69%.”
In historical terms, Matsekete revealed, Old Mutual recorded a profit before tax of $14,7 billion up from $7,2 billion achieved in the same period prior year.
Life and general insurance businesses’ net earned premiums (NEP) registered a growth of 517%, achieving NEP of $3,3 billion for the period to June 30, 2021 up from $534,4 million in 2020.
“This growth was a result of increases in the nominal value of premiums due to the impact of inflation and currency depreciation as well as growth in volumes,” Matsekete said.
Investment returns stood at $41,7 billion up from $31,2 billion in the prior year driven by significant gains on listed equities and translation of foreign currency denominated investments.
Matsekete said interest income increased by 494% to $2,2 billion largely driven by growth in interest earning assets which were influenced by a combination of translation of loans denominated in foreign currency, local currency inflation and growth in lending activity
He said the inflation adjusted equity as at June 30, 2021 stood at $31,3 billion up from the comparable $20,8 billion in 2020.
Matsekete said during the period under review, they launched the My Old Mutual platform which would, among others, allow customers to insure and invest on mobile platforms. They also made progress in replacing legacy systems and automation of some of its processes. He revealed that they had finalised agreements with the European Investment Bank for a €15 million facility which would be used to extend foreign currency lending to productive sectors of the economy.
On focus areas for the second half of the year, Matsekete said the focus would be on delivering on key initiatives which include the continuation of the strengthening of product offerings and distribution channels, expanding the reach of its end-to-end funeral services offering, building on the digital platform momentum and diversifying its investment portfolio.
Old Mutual Zimbabwe chairman Kumbirai Katsande, however, sounded warning bells over the current relative stability of the economy.
“Relative stability over the period under review remains under threat. Downside risks hinge on policy fragility and COVID-19 induced externalities,” he said.
“This notwithstanding, the baseline outlook presents a notable upside, albeit from a low base. Upside is propped further by the impact of proceeds from the IMF Special Drawing Rights allocation.”