HARARE, March 15 (The Source) – Old Mutual Zimbabwe group’s after tax profit increased nearly six times to $91,8 million driven by the surge in investment income from non-banking.
Basic earnings per share improved to 26,7 cents from 3,7 cents previously on the back of an increase in net profit.
Total revenue increased by 126 percent to $460,5 million in the full year period to December 31, driven by a surge in investment income from non-banking and gross earned premiums.
Investment income from non-banking increased by 202 percent from a loss of $126,2 million in the previous year to $128,8 million, driven by unrealised gains of $101,6 million from financial assets held by the group in the period.
Basically the increase in investment income from non-banking was on the back of an increase in value of equities buoyed by the rally on the stock market following the introduction of bond notes.
Gross Premiums Written in the period were up 3 percent from $183,5 million in the previous year to $188,8 million.
Old Mutual is an integrated financial services group whose activities include life assurance, short term insurance, property investment, asset management and banking activities through its Central African Building Society (CABS).
Non-life sales were up 23 percent to $273 million while life sales declined by 26 percent to $21,1 million in the period.
Property investment dropped four percent from $408,4 million in the previous year to $392,6 million.
Interest income was lower by 7,4 percent from $100,8 million in the previous year to $93,3 million on the back of the central bank’s directive to reduce interest rates while fees and commision income increased by 4 percent to 60,3 million.
“Banking interest income was down due to impact of interest rate cuts at the end of 2015 while fees income was up as a result of increasing transaction volumes in the banking business”, finance director, Takura Mudekunye said.
Credit loss and impairment charges declined by 79 percent from $16 million in the previous year to $3,5 million due to recoveries from previous NPLs.
“Credit loss and impairment charges went down due to recovery of previously non-performing loans as well as effective management of NPLs,” said Mudekunye.
Chief executive, Jonas Mushosho said CABS’s non-performing loans ratio (NPL) is at 8,2 percent.
The investment services unit registered an 8 percent decline in operating profit from $7,2 million in the previous year to $6,6 million weighed down by a decrease in net client cash flows. Net client cash flows value declined by 57 percent to $29,5 million from $68,9 million on the back of uncertainty surrounding the introduction of bond notes.
Funds under management increased by 13 percent from $1,6 billion in the previous year to $1,8 billion.
Loans and advances at $583,2 million were up 4 percent while deposits are also up by 4,3 percent to $624,5 million.
The amount of treasury bills (TBs) that the group holds increased by 13,5 percent from $78,3 million in the previous year to $88,9 million.
Mushosho said the banking segment, CABS has treasury bills (TBs) amounting to $79 million on its balance sheet.
Capital adequacy ratio maintained at 18 percent against a regulatory minimum of 12 percent.