Old Mutual lifts profit, says high risk remains
FiNaNCial services firm, old Mutual Zimbabwe limited expects inflation and currency instability to remain significant risks for 2022, despite a 175% increase in profit after tax to ZW$28,78 billion (US$202,09 million) during the year ended December 31, 2021.
The giant posted its profit after tax from a 2020 comparative of ZW$10,46 billion (US$73,46 million). Zimbabwe’s economy has been affected by high inflation due to the depreciation of the local currency. The currency has depreciated at a high rate on the parallel market, forcing businesses to hike prices constantly.
old Mutual chairperson Kumbirayi Katsande said in a commentary to the financial results that: “Economic growth is expected to continue into 2022. inflation and currency instability remain significant risks in the outlook.
“it remains critical on the part of policy makers to sustain consistent policies into the future to promote confidence amongst both local and international investors and business operators.
“Equally important will be the efforts and measures to promote stability on the currency market and to curb inflationary pressures,” he added. price increases have pushed inflation up.
The rate moved from 72,7% in March, up from a February comparative of 66,1% and 60,6 in January this year. Most businesses have been indexing prices on the parallel forex rate.
The rate was about US$1:ZW$285 this week, compared to the official comparative figure of ZW$142,42. Growth in old Mutual profit came as the group saw its revenue more than double to ZW$105,2 billion (US$738,68 million) during the period under review, from a 2020 comparative of ZW$44 billion (US$308,94 million).
Driving that growth in revenue was a near 188% increase in non-banking investment income to ZW$73,68 billion (US$517,36 million) during the period under review, from a 2020 comparative of ZW$25,62 billion (US$179,91 million). The investment income was realised from listed equities, investment properties and the translation of foreign currency denominated investments.
Chief executive officer Samuel Matsekete said: “as old Mutual investment Group, we listed on the Zimbabwe Stock Exchange, the first Exchange traded Fund (EFt). in its first year the EtF returned 340% which compared favourably against both the all-Share index and inflation benchmarks. an equivalent of US$27,8 million was deployed into alternative (unlisted) investments in 2021. These investments increased the level of investments and support in critical economic sectors such as renewable energy, agro-exports and tourism. We registered significant progress on a number of renewable energy projects, and despite Covid-19 related disruptions, two of the projects were commissioned during the year,” he said.
Matsekete said in the property portfolio, new buildings and infrastructure were constructed, including warehouses to support players in the manufacturing and distribution sector as well as the construction of student accommodation buildings.
“in the banking business, we grew the US dollar lending book to support foreign currency generating activity in the economy,” he said.
“This was backed by continuing lines of credit and a new Euro 15 million (US$16,7 million) facility established during the year. our offering in international payments, money transfer business and treasury services was further strengthened,” Matsekete said.
inflation-adjusted total assets increased by 69% to ZW$258,2 billion (US$1,81 billion) during the period under review, from ZW$152,6 billion (US$1,07 billion) in 2020, driven by investments and securities.
other operating and administration expenses closed the period under review at nearly ZW$10,3 billion (US$72,32 million), from a 2020 comparative of ZW$5,9 billion (US$41,42 million).
“Expenses continue to be driven by inflationary pressures and the devaluation of local currency impacting foreign currency denominated expenses,” Matsekete said.