Old Mutual Group posts sh.02 billion profit

Nairobi,

Wednesday, September 27, 2023

KNA by Nkooma Samson

Old Mutual Holdings PLC, a financial services group in East Africa, has announced a profit before tax of Sh0.2 billion for the first half year of January-June 2023 in Nairobi.

According to the group, this achievement marks a significant improvement from the Sh0.9 billion loss recorded during the same period in 2022.

Old Mutual attributed this success to robust revenue growth, increased investment income, and strategic financial management despite facing challenges such as rising finance costs.

The group's Chief Executive Officer (CEO) Arthur Oginga said that the financial resurgence in 2023 is further underscored by its operating profits before finance costs, which amounted to Sh2.1 billion, a substantial improvement compared to a mere Sh0.1 billion in 2022.

In connection to the above, the impressive recovery has been welcomed with optimism by Oginga, who cited positive indicators in the East African operational landscape.

He specifically highlighted decreasing inflation rates and a promising GDP growth projection for the year.

Speaking during the announcement on Wednesday, Oginga elaborated on the group's strategic direction, emphasizing the commitment to provide an integrated financial services offering aimed at addressing all customer's financial needs under one roof.

Further, he added that the approach would not only enhance the customer experience but also optimizes distribution channels in the various markets Old Mutual operates in.

Looking ahead, Oginga said that the Old Mutual Group remains positive about the economic outlook in the region, albeit with a watchful eye on potential risks.

He revealed that the rising global oil prices and the adverse effects of the El Nino weather phenomenon are among the factors that the group acknowledges as potential challenges.

Oginga acknowledged that the company is poised to leverage its expertise and experience to continue delivering exceptional financial services to its customers. 

According to the group's half-year report, this transformation can be attributed to a combination of factors that have contributed to Old Mutual's renewed financial strength. Notably, revenues surged by Sh1.8 billion, marking a 12% increase, while investment income from financial assets and investment properties experienced growth.

The report reads that such gains were partially offset by the substantial rise in finance costs, particularly on borrowings, which surged by a staggering 96%. Similarly, the primary culprits behind this surge in finance costs were increased interest rates and forex losses on a portion of the company's US dollar-denominated debt.

In accordance with the report, the company's global financial landscape witnessed significant shifts during this period, as evident in the Libor rate, which serves as the basis for determining interest on US dollar loans.

Additionally, it escalated from a mere 0.59% in June 2022 to a whopping 5% in June 2023. Furthermore, the Kenyan shilling depreciated by 14% against the US Dollar over the same time frame, exacerbating the financial challenges.

Courtesy; KNA