Old Mutual returning to pre-Covid levels, but loses profit in the process

Old Mutual reported a significant decrease in profit for the year ended 31 December 2022. Despite this, the company’s operations grew by almost 100% last year, bringing it close to pre-Covid levels.

Old Mutual’s revenue declined significantly in 2022, and its funds under management decreased by 4%, resulting in a sharp decline in profit before tax.

The company’s pre-tax profit dropped by more than 30% – going from R13.42 billion in 2021 to R9.15 billion in 2022.

The company also reported negative net client cash flow for the year, which saw a more than 100% decline in net client cash flow. 

In its annual results, CEO Iain Williamson primarily attributes this to “the decline in gross flows combined with large disinvestments and terminations in Wealth Management and Old Mutual Investments, respectively”.

Old Mutual also attributes its 54% loss in revenue to macroeconomic factors.

“This downward pressure on disposable income growth, combined with depressed confidence, made it difficult for customers to maintain or increase their contributions to protection, savings and investment products,” said Williamson.

Our corporate customers’ growth and liquidity levels were also negatively impacted.”

The company declared a final dividend of 51 cents per share, which brought its full dividend for the year to 76 cents. This is the same final dividend the company declared in 2021. 

Williamson announced that the company had earmarked between R1 billion and R1.5 billion for return to shareholders as a share buyback. However, this decision has not yet been approved by the board.

Despite the negative factors, Old Mutual’s solvency ratio remains strong at 190%, and Williamson said the company largely delivered on its medium-term targets set for 2023.

Old Mutual expects the macroeconomic environment to remain challenging, which will “continue to exacerbate financial pressure” on its customers.