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Old Mutual Ltd on Tuesday said profit fell in the first half of 2022, as a result of an increasingly volatile global economy, which hit gross flows.
The Anglo-South African financial services firm's pretax profit dropped by 28% to R 5.12 billion for six months that ended June 30 from R 7.09 billion a year prior.
Net earned premiums were almost flat at R 35.87 billion from R 35.61 billion.
Funds under management were up marginally by 1.1% to R 1.18 trillion from R 1.17 trillion.
In the first half, gross flows decreased by 14% to R 83.39 billion from R 96.99 billion, while value of new business declined by 4% to R 708 million from R 740 million.
Old Mutual kept its interim dividend unchanged at 25 rand cents. ‘We were able to maintain a dividend in line with our prior interim dividend due to our robust operational performance and our strong capital and liquidity position,’ it said.
Basic earnings per share rose by 74% to 118.1 cents from 67.8 cents, while headline earnings per share were up 62% to 116.3 cents from 71.7 cents.
The Cape Town-based financial services group earned income tax credit amounting to R 497.0 million in the first half, compared to a tax hit of R 3.74 billion previously.
The company said the first half delivered a ‘strong’ set of results. For the first time, these results exclude the income associated with its Nedbank Ltd stake, following the unbundling of Old Mutual's strategic investment in the lender in November 2021.
This ‘solid’ performance was against the backdrop of an increasingly volatile global economy, the group aid.
‘Although the economy showed positive signs in the first quarter, the global and local outlook was dampened in the second quarter by increased inflationary pressures negatively affecting market levels and consumer sentiment,’ it said.
Looking ahead, Old Mutual expects the macro-economic environment in its markets to remain challenging.
‘Low wage growth across sectors limits options for the pass-through of rising cost inflation, exacerbating the financial pressure experienced by our retail customers. Rising inflation further impacts our corporate customers' growth and liquidity levels,’ it warned.
‘These factors continue to put strain on persistency levels across the group. Increased market volatility and resultant decreases in asset levels puts further pressure on asset-based fees,’ it added.
The group remains committed to working toward meeting its medium term targets although this has become more challenging given the current economic backdrop.
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