Old Mutual posts 732% profit jump

PHILLIMON MHLANGA

Zimbabwe’s largest financial services group, Old Mutual Limited, reported a 732% increase in profit to ZWL$4.32bn in the six months to June 30, 2020 from ZWL$519.1m achieved in the comparative prior period boosted by an increase in non-banking investment income.

Non-banking investment incomes increased to ZWL$31.4bn from ZW$19.1bn recorded in the same period in 2019.

Revenues for the group were up 57% to ZWL$35.5bn during the reviewed period from ZWL$22.6bn on the back of growth in all revenue lines, particularly investment income.

“Despite economic challenges and the impact of Covid-19, we remained focused on building a strong business that is best positioned to continue to deliver solutions to customers,” OMZ chairperson Johannes Gawaxab said.

He said Covid-19 had an impact on the alternative investments and private equity deal pipeline.

“There was a general decline in the level of business activity registered since the onset of Covid-19 induced lockdown.

The business had planned an official launch of the Eastgate Market in the first half of the year. This was deferred to a future date.

Covid-19 also had an impact on the alternative investments and private equity deals. A number of projects in this portfolio had to be deferred,” Gawaxab said.

Net earned premiums grew by 414% to ZW$534.4m during the period under review from ZW$103.9m in the prior comparative period driven by increase in the nominal value of premiums due to the impact of inflation.

Despite the positive revenue performance, OMZ’s operating and administrative expenses increased by 539% to ZW$511.7m from ZW$80.1m in the comparable prior period.

“The increase was driven by inflationary pressures and the impact of local currency devaluation which resulted in costs of imported goods and services increasing significantly,” said Gawaxab.

“Unbudgeted expenditure was also incurred towards measures implemented by the business in response to the impact of Covid-19 which included enabling some employees to work from home and providing a safe working environment for members of staff that have to be physically present at our offices and service centres as well as walk-in customers.”

Total assets grew 48% to ZWL$62bn from ZWL$41.8bn driven by investment gains, increased US dollar denominated lending and exchange gains.

Total equity position increased to ZW$10.5bn during the period under review, 389% up from ZW$2.1bn attributed to the growth in profit. Gawaxab said the outlook remains difficult.

“The operating environment remains very difficult and it requires increased levels of collaboration and mutual understanding between the business sector and government in charting a path to recover and grow in the current economic situation,” Gawaxab said.

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