New bank for South Africa around the corner

Old Mutual says it is making progress in its bank build, which is set to launch shortly.

In its financial results for the year ended 31 December 2023 (FY2023), the group said that its bank build remains on track to be launched within the next 12 months, subject to regulatory approvals.

“Our section 16 submission for the bank build was completed and submitted early in 2024, and we are now awaiting approval from the Prudential Authority,” the group said.

“As part of the section 16 submission, we were required to have the banking systems and processes independently verified in a working end-to-end scenario. This was successfully demonstrated and signed off before the aforementioned section 16 submission.”

“Section 17 allows us to notify the industry via the Payments Association of South Africa that we intend to test in the National Payments system in the latter half of 2024. This is a regulated activity and follows a predetermined testing process with partner banks in the industry.”

The Old Mutual Bank is one of four banks launching in South Africa.

It will be joined by the Young Women in Business Network (YWBN) Mutual Bank, the state-owned Postbank and SA Innovative Financial Services Cooperative (SAIFSC) from the Department of Women, Youth and People with Disabilities.

Financials

Despite a challenging operating environment, characterised by high inflation, elevated interest rates and muted economic growth in South Africa, the group saw sales growth of 17% in its key life segments, with it growing market share profitability in its key markets.

Net client outflows of R7,510 million improved by 40% from the prior year and were primarily driven by good inflows in its life business.

However, Old Mutual Investments and Wealth Management saw increased outflows as clients needed liquidity.

“Wealth Management experienced outflows from several large clients across both local and offshore platforms, coupled with lower treasury advisory inflows,” the group said.

“Old Mutual Investments saw low margin indexation outflows from a large offshore investor that is implementing a change in their investment strategy, low margin money market fund outflows as well as structural pension fund outflows.”

“Funds under management of R1.3 trillion increased by 8% from the prior year, due to the improvement in equity markets and valuations on unlisted portfolio assets, partially offset by higher outflows.”

Looking at the numbers, the group’s profit after tax improved from R5.6 billion in FY2022 to R7.6 billion in FY2023, while headline earnings improved from R5.8 billion to R7.4 billion.

With the jump in profits, the group upped its total dividend by 7% from 76 cents per share in FY2022 to 81 cents in FY2023.

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