Old Mutual secures US$137m

SAMANTHA MADE

Zimbabwe’s largest financial services group, Old Mutual Limited, through its banking unit CABS, has successfully secured and maintained regional and international credit lines totaling $137m, reinforcing its financial stability and growth strategy.

The company has also established new funding facilities worth millions of US dollars to support key economic sectors, further strengthening its position in the financial services industry.

Speaking at an analyst briefing, Old Mutual Chief Executive Officer Samuel Matsekete highlighted the company’s strong position in the banking and lending business, emphasizing the importance of maintaining and expanding access to credit lines.

“We have maintained regional and international credit line facilities with a total limit of US$137m. In 2024 alone, we secured an additional US$60m in new facilities to support on-lending to critical economic sectors,” Matsekete said.

This strategic move aligns with Old Mutual’s long-term objectives of supporting key industries that drive economic growth. Access to credit lines provides the company with a solid financial base to expand its offerings, ensuring continued support for businesses that rely on financing to sustain and grow their operations.

Matsekete noted that Old Mutual’s exposure to US$-denominated business remained strong, with US$ deposits contributing 87% of total deposits, compared to 92% in 2023. Similarly, the proportion of US$ loans increased slightly to 94% from 93% in the previous year.

This trend highlights the company’s focus on maintaining a stable US$ liquidity position to meet the needs of clients operating in key economic sectors.

“Lending to agriculture remains significant, accounting for 29% of our total loan portfolio, though slightly lower than the 34% recorded in 2023. Other key sectors include distribution, manufacturing, mining, and energy,” he added.

The agriculture sector continues to be a priority for Old Mutual, given its critical role in food security and employment creation. While the proportion of loans to agriculture has slightly declined, the company remains committed to supporting agribusinesses through targeted financing solutions.

Matsekete also pointed out a notable increase in lending to the distribution and manufacturing sectors over the past year. The growing demand for credit in these sectors reflects the expansion of businesses seeking capital to fund production, logistics, and supply chain operations.

Manufacturing remains a crucial pillar of economic development, providing employment and contributing to GDP growth. By increasing funding to this sector, Old Mutual is facilitating the expansion of industrial capacity, enabling businesses to invest in modern equipment, raw materials, and working capital.

Similarly, the mining and energy sectors continue to attract significant funding. As global demand for minerals remains high, Old Mutual’s strategic focus on providing financial support to mining companies is expected to bolster the industry’s contribution to the economy. The energy sector, particularly renewable energy initiatives, is another area where increased financing is expected to drive growth, ensuring sustainable power generation and distribution.

Looking ahead, Matsekete emphasized that securing additional lines of credit will be a key strategic focus for the company. Given the evolving economic landscape, access to diverse sources of funding is essential to maintaining a robust financial position.

“Our priority is to enhance our offerings and distribution network by accessing new capital and credit lines, particularly targeting key value chains and growth sectors,” he said.

To achieve this goal, Old Mutual is actively engaging with regional and international financial institutions to negotiate favorable credit terms. The company is also exploring alternative financing structures, including syndicated loans and structured financial products, to diversify its funding sources.

Maintaining credit lines in a dynamic economic environment requires careful risk management and financial discipline. Matsekete acknowledged the challenges involved in sustaining these facilities, noting that substantial effort was required to defend the company’s credit lines.

“We maintained our credit lines, which required significant effort to defend. Access to liquidity is critical, and we have been proactive in ensuring we retain and expand our funding sources,” he stated.

In light of economic uncertainties, financial institutions are increasingly scrutinizing creditworthiness before extending loans. Old Mutual’s ability to maintain its credit lines is a testament to its strong financial health and prudent risk management practices.

Old Mutual Limited’s ability to maintain and expand its credit facilities underscores its strong financial position and resilience in a dynamic economic environment.

Through its banking unit CABS, the company continues to play a pivotal role in financing key industries, supporting economic development, and ensuring businesses have access to the liquidity they need.

As Old Mutual looks to the future, its focus on securing new credit lines and expanding its lending portfolio will be instrumental in sustaining growth.

By strategically aligning its funding initiatives with economic priorities, the company is well-positioned to drive positive outcomes for businesses, investors, and the broader economy.