South Africa’s newest R4 billion bank hopes to break even by 2028
Old Mutual is stepping up efforts to turn South Africa’s newest bank profitable by 2028 as the continent’s biggest insurer by assets looks to challenge lenders for a larger slice of banking earnings.
“We’re targeting a return from operations of sort of between break-even and 200 million profit in 2028,” Old Mutual Chief Executive Officer Jurie Strydom said in an interview.
OM Bank officially launched in August 2025 and has amassed 742,000 customers since then, reaching R1.38 billion in deposits.
“We will hit a million customers in the next couple of weeks,” Strydom said.
The bank is expected to grow deposits to as much as R10 billion by 2028, and scale lending to as much as R26 billion.
Old Mutual has invested more than R4 billion in building the new lender and plans to spend more.
“There’s R2 billion that has been earmarked to fund that pathway,” he said.
Meanwhile, Old Mutual is doubling down on share buybacks as it looks to boost capital efficiency and enhance shareholder returns.
According to Strydom, the strategy is “very attractive” because it has allowed the insurer to take advantage of the steep discount between the share price and the company’s intrinsic value.
“Whilst our business is operating at a return on net asset value below our target range, it makes sense for us to consider shareholder disbursements before doing mergers and acquisitions,” he said.
The company has spent R5.5 billion purchasing stock since 2023, including R3 billion in the six months through June.
The board has approved a further R1 billion in repurchases for the current year.
The average price paid this year was about R13, so “with a group equity value that is now at R20.66, and that’s highly accretive for us,” Strydom said.
The announcements come after Old Mutual said profit declined for the first time since 2022 as risk-off sentiment from conflicts in the Middle East curbed investment returns at Africa’s biggest insurer by assets.
Adjusted headline earnings fell 30% to R2.95 billion in the six months through June, while the Johannesburg-based company declared an interim dividend of 40 cents per share.
Still, the company’s results from operations metric, which is their preferred measure of profit, climbed 7% to R5.28 billion, thanks to a 21% jump in premium sales.
Value of new business rose 32% in the period, helping lift the margin by 10 basis points to 1.4%.
That remains below the company’s target range of 2% to 3%. Group equity value increased 4% to R20.66 per share.
“I really am comfortable,” Strydom said. “We are tracking towards those medium-term targets and we are where I’d hope we would be in terms of execution.”
Its shares climbed as much as 1.9%, before paring gains to 1.1% by 10h20 in London.
The company has named Ranen Thakurdin as its group chief financial officer-designate, effective 1 January. He will succeed Casper Troskie, who is retiring on 30 April, 2027.
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