Old Mutual Holdings has bounced back with a 216 per cent profit growth in the year ended December 31, 2022, to close at a Sh202 million profit before tax.
Old Mutual says the boosted performance was driven by its solid topline growth and higher investment income after posting loss before tax of Sh175 million in a similar period in 2021.
The premium financial services group realized 47 per cent growth in operating profits before finance costs from Sh1.2 billion in 2021 to Sh1.8 billion in 2022, making a Sh600 million surge in operating profits.
It has attributed the slight increase in profits before tax compared to operating profits to increased financing costs on external and internal debts as interest rates went up and a weaker Kenya Shilling against the US Dollar.
“The performance during 2022 is a significant recovery from what we recorded in 2021. This is a testament to our team's hard work and dedication and demonstrates our unwavering commitment to our clients and stakeholders,” said Old Mutual Group CEO Arthur Oginga.
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He added, “We are confident that our continued efforts to innovate and adapt to the market's evolving needs will enable us to sustain this positive momentum and drive long-term growth for our Old Mutual.”
Old Mutual also posted a 15 per cent increase in net earned premiums to Sh23 billion, as the net investment income grew by 14 per cent to Sh5.24 billion.
This was mainly driven by higher interest rates and improved investment balances on the back of solid topline development and disciplined management of debtors.
Similarly, the gross written premiums increased by 20 per cent, on the back of the short-term insurance business, which sustained the strong growth recorded in 2021.
However, the improvements were partly counterweighed by an increase in claim costs, higher operating expenses and higher finance costs.
Some of the higher expenses were also caused by marketing and publicity that supported Old Mutual’s rebranding exercise in Kenya, software expenses and premium taxes linked to revenue growth.
Other included USD-denominated cost growth due to currency depreciation, and higher staff-related costs due to critical hirelings as well as general inflationary growth.
Old Mutual is projecting a challenging operating environment across East Africa this year, due do to rising inflation and interest rates expected to dominate in the first half of 2023.
“This will pressure disposable household incomes and thus impact topline growth in some of our business segments. In our core Kenya market, fiscal pressures due to significant debt repayments expected to lead to an increase in taxation for both businesses and individuals, resulting in reduced spending and thus lower economic growth,” noted Oginga
Old Mutual noted that the he macroeconomic environment in South Sudan in the review period remained mainly unstable due to the country’s unstable political environment.
It also projects that Uganda, Rwanda and Tanzania will remain positive due to resumed economic activity, enhanced performance of the tourism sector, and an inflation slowdown.
