New R2.8 billion bank launching in South Africa this year

Old Mutual is making significant progress on its upcoming bank but expects the new entity to record a startup loss of over R1 billion.

OM Bank, which will not carry the Old Mutual name due to regulations, recently appointed Clarence Nethengwe as CEO. He was previously in charge of the Mass and Foundation Cluster.

The bank’s board of directors was recently appointed, with Nomkhita Nqweni as the inaugural chairperson. It received its banking license from the Prudential Authority in March 2025.

Old Mutual said the bank’s national rollout will now occur in Q4 2025, a slight delay from previous announcements.

Management and the board will oversee a gradual customer acquisition strategy.

Between 2022 and 2024, Old Mutual spent a cumulative R2.8 billion to build the bank and secure a deposit-taking retail banking license.

The group anticipates an initial loss run rate of R1.1 billion to R1.3 billion. This will reduce over time, with the bank expected to break even in 2028.

“The launch of OM Bank in South Africa is a material catalyst to our strategic delivery journey and a concrete realisation of our strategic ambition to build an integrated financial services business.”

“Our next key milestones include a phased approach to customer acquisition, integrating the Old Mutual Rewards Programme and positioning OM Bank to reach breakeven in the medium term.”

“OM Bank is designed to deliver tangible value for our customers and to position us for long-term competitive advantage in an intensely competitive market,” said group CEO Iain Williamson.

The new bank will operate in the retail mass market, taking on juggernaut Capitec, which has over 20 million customers.

“By leveraging our existing customer base, a highly trusted brand and our expansive distribution network, we are uniquely positioned to deliver a digital-first bank at scale to the market.”

“Our cloud-based platform offers a seamless, scalable single-facility account with debit, credit, overdraft and savings facilities, empowering customers with greater financial control while lowering cost to serve.”

Financials

In the group’s financial results for 2024, Williamson said that the GNU’s formation, early momentum in the macroeconomic environment and improved load shedding boosted investor confidence.

Low inflation, strong equity markets, and a strengthened rand portrayed positive signs of economic recovery in the second half of 2024.

However, market sentiment did not translate into a broader recovery in consumer confidence. Household debt to disposable income remained high at 62.2%, and high investment rates hurt its retail businesses.

Although gross flow growth was strong, net client cash outflow of R21.5 billion was impacted by significant outflows in Old Mutual Africa Regions and Old Mutual Corporate.

Old Mutual Africa Regions saw higher outflows due to a loss of a single mandate. Old Mutual Corporate’s outflows included elevated terminations due to the unprofitable business on an investment platform and a large client termination.

Higher benefits payments were due to retirement and retrenchment benefits and two-pot withdrawals. Two-pot withdrawals amounted to R3.4 billion across the group.

Nevertheless, funds under management grew by 10% to R1.5 trillion, reflecting strong performances in equities and money market assets, mainly in South Africa, Malawi and Kenya.

“Our financial performance in 2024 reflects our strategic focus on profitable organic growth in the core, disciplined capital allocation in new growth engines and investments in operational efficiencies.”

“We delivered good growth of 14% in adjusted headline earnings, and adjusted headline earnings per share increased by 17%,” said the CEO.

Old Mutual’s board declared a final dividend of 52 cents per share, with the total dividend for 2024 growing by 6% to 86 cents per share.