OM’s balance sheet withstands inflation

Old Mutual Zimbabwe says its financial position remained strong during the year ended December 31, 2022, despite high inflation and value losses recorded on its listed equity portfolio.
Zimbabwe’s annual inflation closed the year at 243,8 percent, while the Zimbabwe Stock Exchange All-share index advanced 80.1 percent compared to 310.5 percent in the prior year.

Old Mutual managing director Sam Matsekete

The property market, however, remained stable, even though risks around tenant and income quality persisted.
In a statement accompanying the group’s results for the year, chief executive Samuel Matsekete said inflation-adjusted total assets grew by 14.3 percent to ZWL1.014 trillion during the year, with the increase driven by fair value gains on properties.

While the business recorded a significant profit in historical cost terms, in inflation adjustment terms, Matsekete said the group recorded a loss before tax of ZWL24,6 billion down from a ZWL101,4 billion profit that was posted in 2021.

“The decline in inflation-adjusted profits was attributable to fair value losses recorded on the listed equity portfolio, with the ZSE performance for the year being significantly below inflation,” the chief executive said.

“The group closed the year 2022 with strong liquidity and solvency positions as well as being adequately capitalised in line with the regulatory requirements, and to support planned growth into the future,” he added.

He said investment returns increased to ZWL414,8 billion from ZWL126.4 billion in the prior year largely due to nominal gains on investment properties, equity investments and the translation gains on foreign currency-denominated investments, in historical terms.

The group achieved a 733 percent increase in net interest income from ZWL4.9 billion to ZWL40,8 billion following growth in the loan book.
Metsekete said the group welcomes and will continue to support the thrust of government efforts aimed at stabilising and transforming the economy.
“Such efforts should continue to be coordinated effectively and transparently to promote both capital markets and inclusive growth.”

And on his part, board chairman Kumbirayi Katsande said efforts by the government and regulatory agencies to stabilise the macro-economic environment and maintain the viability of the financial services industry were also welcome.

“A stable macro-economic environment and an efficient financial services industry are important in anchoring sustainable broad-based growth into the future. The need to bring inflation under control, the outcome of the agriculture season, resolution of electricity supply shortages in the region and the state of the global economy are likely to remain dominant factors in 2023, posing significant sensitivity to economic performance in the short and medium term,” the chairman said.

“Very encouraging trends are being observed in primary agriculture and mining. Higher levels of economic activity are also being witnessed in the informal sector.

“We will continue to contribute to efforts on financial inclusion and inclusive growth. Consequently, we maintain a positive medium to long-term outlook,” he added.

Old Mutual is a diversified international financial services group listed on the stock exchange in London, South Africa, Malawi, Namibia and Zimbabwe.

Old Mutual Zimbabwe offers services to Zimbabwe-based clients via a focused range of products including life assurance, asset management, unit trusts, property development and management, short-term insurance and banking services.
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