Old Mutual reported a good financial performance in its latest earnings report, despite facing a R15.9 million fine from the South African Reserve Bank (SARB) for non-compliance with the Financial Intelligence Centre (FIC) Act. The fine followed a 2020 inspection that identified gaps in Old Mutual’s anti-money laundering (AML) and Countering the Financing of Terrorism (CFT) processes, particularly in customer due diligence and reporting. Old Mutual has accepted the penalty and clarified that the sanctions were administrative and not due to involvement in money laundering. The insurer has taken corrective measures and remains committed to strengthening its compliance systems while continuing to deliver solid financial results.
Old Mutual reported a positive earnings performance for the first half of 2024, in line with its forecasts. Here are some key metric highlights:
● Profit After Tax: The company recorded R5.24 billion profit after tax, which is within its guided range of R5.01 billion to R5.44 billion, representing a 20% increase compared to the same period in June 2023.
● Headline Earnings: Headline earnings increased 34% to R5.825 billion, driven by stronger profits from Zimbabwe.
● Operational Results: Operational profit decreased to R4.24 billion, down from R4.37 billion in June 2023.
● Dividend Declaration: The group announced an interim dividend of R0.34 per share, up from R0.32 in the same period last year.
The launch of Old Mutual's bank marks a big step for the company as it expands into the competitive banking sector. The company has a three-stage rollout planned for 2025 and the progress is already ahead of schedule, signalling confidence in its execution and future success. While initial losses are expected, the long-term prospects could positively impact Old Mutual’s share price, especially if the bank takes a share of the market dominated by major lenders and newer digital banks. Old Mutual has a strong customer base. This makes potential shareholder value possible for its banking venture and opens up new growth avenues for the company.
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** This article was prepared by BROKSTOCK analyst Maboko Seabi
