Old Mutual eyes value preservation portfolios

Old Mutual Zimbabwe says it will continue to invest in assets that it believes, under the current economic environment and looking into the future, will preserve value.

In this regard, the group is pursuing alternative investments such as energy and real estate to expand cash flows.

Samuel Matsekete, the group’s chief executive, said in an analyst briefing for the interim financials to June 30, 2023, that the group has four key focus areas that will ensure business viability.

“We continue to invest in assets that we believe, under the current economic environment and looking into the future, would preserve value.

“Therefore, we increased exposure to alternative investments such as energy and real estate portfolios while also looking at perhaps less traditional assets through exposures that you would see in our investment portfolio or specific investment assets that we would not have invested in previously.

“This will ensure that we are able to access cash flows that are generated from those investments in the alternative investment portfolio, and cash flow in this environment becomes one key source of the ways that we can protect value,” he said.

He said the group also invested in assets that are able to close some gaps seen in the group’s proposition, such as pension funds or insurance funds. “For instance, you will start to see us explore some of the initiatives that are in the early stages around how much exposure we can take within real estate, for example, in the retail space,” he said.

Matsekete said the company deployed funds into the value chains of real sectors of the economy to tap into the value chains within key sectors or subsectors of the economy that we are also seeing presenting above the overall economic growth rates.

“So you know that in this market, we have subsectors that are performing better than others, so we are beginning to sway in that direction in a significant way in our investment allocations,” he said.

In terms of customer experience, Matsekete said the company has been pursuing initiatives targeted at ensuring that products and solution sets for customers are broadened and adapt to the changes in the market.

“We also continue to cull what we see as less relevant products in the market and replace them with new ones. We also established new partnerships in the same way to ensure our competitiveness is maintained while signing up more customers for our integrated offering,” he said.

The group will also focus on distribution networks to ensure the ability to sell more products through the service centers in the branches. Matsekete said during the period under review, the company also launched a fintech business, O Mari, to extend its reach to informal sectors.

“We are trying to reach out to some segments that we previously could not, as well as ensure we make our products more affordable. At the same time, we are internally investing in technologies and upgrading systems,” he said.

In terms of individual business performance, the life assurance business adapted existing products, launched new products and established new partnerships to increase reach.

The group’s Guaranteed Fund declared a cumulative bonus of 760.4 percent over the period declared on a monthly basis.

The USD share of gross recurring inflows increased from 22 percent for the half-year 2022 to 35 percent for the six months to June 30, 2023.

The group’s Life business established new partnerships for bancassurance and retail distribution and the Flexi-funeral and Flexi-term products available in both ZWL and USD, with the USD premiums contributing 20 percent of retail business sales and 8 percent of total sales.

On banking and lending, Matsekete said foreign currency loans accounted for over 90 percent of the total loan book.

He said agriculture and energy sector lending contributions increased to 46 percent compared to 39 percent in FY22 and 20 percent, respectively. The non-performing loan ratio of 0.2 percent was well within regulatory and internal limits. The bank’s foreign currency deposits closed at 92 percent of total deposits, up from 59 percent.

Total deposits increased by 77 percent, driven by an increase in USD deposits.

Matsekete said the shift of balance sheet weight to USD also reflected in reduced interest margins to 16.9 percent, from 22.8 percent in the prior year.

Matsekete said the bank strengthened partnerships with foreign lenders, mobilising and deploying US$110.9 million of credit lines to customers in key sectors, up from US$108 million in December 2022.

General insurance increased business retention to 64 percent from 54 percent in the prior year.

The business widened customer reach through two new retail and bancassurance partnerships, providing 66 new distribution centers.-ebusinesswekly

Leave a Reply

Your email address will not be published. Required fields are marked *

LinkedIn
LinkedIn
Share