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Old Mutual profit up

Old Mutual Zimbabwe Ltd after-tax profit increased by 590% in the full year to December, helped by strong performances in its banking and insurance businesses and a bull run on the ZSE in the last quarter of FY16.

By Chris Muronzi

The group said adjusted operating profit, which comprises operating profit plus a normalised investment return, was up US$76 million.

“The normalising of investment returns allows for easier year-on-year comparability of results by adjusting for short-term volatility in investments markets,” the group said in a statement attached to its full year results to December 2016 (FY16)

Old Mutual’s banking business, Cabs, recorded a net growth of 38% to US$39,2 million from US$28,4 million in FY15 buoyed by maintenance of stable net interest margins despite a decline in lending rates and lower provisions owing to better loan book management.

Management said the bank was happy with the quality of the loan book after some recoveries in the year under review.

Old Mutual’s life and short-term insurance businesses registered growth in gross premium driven after new business underwritten. Gross written premiums went up by 3% to US$188,88 million in 2016 from US$183,5 million in 2015.

“The life company’s wholesale and employee benefits business remains strong, while the perfomamnce of the retail business was affected by the negative impact of the economy on our customers,” the group said.

The group’s life company’s operating income fell by 27% in 2016 to US$21,8 million largely owing to actuarial assumption basis changes and the enhancement of policyholder reserves.

This saw Cabs becoming the largest contributor to profits, contributing 51%. Last year, Cabs contributed 37% to profits.

“The short-term insurance business achieved a commendable underwriting margin of 18%, and adjusted operating profit grew by 10% from 2015,” the company said.

Fees under management at Old Mutual’s asset management business increased by 13%, the company said.

Net fee income in the asset business was 4% below FY15 after fee reductions instituted in FY16 and the poor perfomamnce of the ZSE for the better of the year.

Old Mutual assets rose 9% to US$2,16 billion, helped by growth in loans and advances, investments and securities and cash and cash equivalents. Total liabilities increased by 9% as a result of growth in policyholder liabilities, in line with the growth in matching assets.

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