Business Maverick


Old Mutual’s deep pockets facilitate a R1.5bn share buyback – and a new bank next year

Old Mutual’s deep pockets facilitate a R1.5bn share buyback – and a new bank next year
Signage outside the offices of Old Mutual in Johannesburg, South Africa, on 23 September 2020. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Old Mutual is likely to bring a bank to the market towards the end of 2024 and, no, it will not be called Old Mutual Bank.

Speaking to Business Maverick on Tuesday, chief executive officer Iain Williamson said the financial services giant has a detailed business case that spans the next five to seven years for the proposed bank initiative.

Old Mutual has passed through the first regulatory hurdle, having received permission to obtain a banking licence. Williamson says Old Mutual is weeks away from submitting an application to the South African Reserve Bank. 

“We then have to test our bank infrastructure in the payments systems test environment, then we can apply for a condonation from the Reserve Bank before we can finally launch,” he says. 

Although no final decisions have been made, Williamson confirmed that the name Old Mutual Bank is off the table, due to previous use and the word ‘mutual’.

Old Mutual chief executive officer Iain Williamson. (Photo: Supplied)

Williamson was coy on load shedding costs. 

“The biggest energy cost we have is keeping the lights on … both our main campus offices are already substantively more than 50% off the grid from a solar perspective, which we put in years ago,” he said. 

However, he added that knock-on effects (of rolling blackouts) include the impact on the market, in terms of foreign investor confidence – “or lack thereof” – and economic growth as businesses affected by load shedding are forced to shut down, reducing employment numbers further.

A healthy capital ratio of 1.9 times the required number means that shareholders will benefit from a significant buyback to the value of R1.5-billion. 

“We’re in a position where we can afford to distribute some of that capital to our shareholders, since we have sufficient excess liquidity and capital to our foreseeable needs,” Williamson said.

The bottom line numbers looked very healthy indeed, with adjusted headline earnings up 34% to R6.37-billion, gross written premiums up 12% to R22.3-billion and a final dividend declaration of 51 cents per share, taking the full year dividend to 76 cents – 13% up on last year.

In terms of social contribution, the group implemented its Broad-Based Black Economic Empowerment deal, Bula Tsela, in November 2022, effectively placing more than 200 million new Old Mutual shares in the hands of previously disadvantaged South Africans. 

The “Big Green”, as it is often referred to within the industry, has invested R146-billion of its funds under management in the green economy.

“The macroeconomic environment in our markets is expected to remain challenging, which will continue to exacerbate financial pressure on our customers. 

“We remain focused on driving sales volumes and profitable sales mix to improve market share growth in our segments. Despite the challenging headwinds, we are through our recovery phase and have largely delivered on our medium-term targets one year ahead of schedule,” concludes Williamson. BM/DM


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